To investigate the underlying causes for aldose reductase deficiency-induced diabetes insipidus, we carried out studies with three genotype groups of mice. These included wild type mice, knockout mice and a newly-created bitransgenic line that were homozygous for both the aldose reductase null mutation and an aldose reductase knock-in transgene driven by the kidney-specific cadherin promoter to direct transgene expression in the collecting tubule epithelial cells. We found that from early renal developmental ages on, urine osmolarity did not exceed 1,000 mosmol/kg H₂O in aldose reductase deficient mice. The functional defects were correlated with significant renal cellular and structural abnormalities that included cell shrinkage, apoptosis, disorganized tubular and vascular structures, and segmental atrophy. In contrast, the transgenic aldose reductase expression in the bitransgenic mice largely but incompletely rescued urine concentrating capacity and significantly improved renal cell survival, cellular morphology, and renal structures. Together, these results suggest that aldose reductase not only plays important roles in osmoregulation and medullary cell survival, but may also be essential for the full maturation of the urine concentrating mechanism.