We investigated the role of the prostaglandin E₂ (PGE₂) EP₁ receptor in modulating urine concentration as it is expressed along the renal collecting duct where arginine-vasopressin (AVP) exerts its anti-diuretic activity, and in the paraventricular and supraoptic nuclei of the hypothalamus where AVP is synthesized. The urine osmolality of EP1-null mice (EP₁^-/-) failed to match levels achieved by wildtype (wt) counterparts upon water deprivation (WD) for 24 hrs. This difference was reflected by higher plasma osmolality in WD EP₁^-/- mice. Along the collecting duct, the induction and sub-apical to plasma membrane translocation of the aquaporin-2 (AQP2) water channel in WD EP₁^-/- mice appeared equivalent to that of WD wt mice as determined by quantitative RT-PCR and immunohistochemistry. However, medullary interstitial osmolalities dropped significantly in EP₁^-/- mice following water deprivation. Furthermore, urinary AVP levels of WD EP₁^-/- mice were significantly lower than those of WD wt mice. This deficit could be traced back to a blunted induction of hypothalamic AVP mRNA expression in WD EP₁^-/- mice as determined by quantitative RT-PCR. Administration of the AVP mimetic, [deamino-Cys¹,D-Arg⁸]-vasopressin (DDAVP) restored a significant proportion of the urine concentrating ability of WD EP₁^-/- mice. When mice were water loaded to suppress endogenous AVP production, urine osmolalities increased equally for wt and EP₁^-/- mice. These data suggest that PGE₂ modulates urine concentration by acting at EP₁ receptors, not in the collecting duct, but within the hypothalamus to promote AVP synthesis in response to acute water deprivation.