The kidney collecting duct (CD) is a tubular segment of the kidney where the osmolality and final flow rate of urine are established, enabling urine concentration and body water homeostasis. Water reabsorption in the CD depends on the action of arginine vasopressin (AVP) and a transepithelial osmotic gradient between the luminal fluid and surrounding interstitium. AVP induces transcellular water reabsorption across CD principal cells through associated signaling pathways after binding to arginine vasopressin receptor 2 (AVPR2). This signaling cascade regulates the water channel protein aquaporin-2 (AQP2). AQP2 is exclusively localized in kidney connecting tubules and CDs. Specifically, AVP stimulates the intracellular translocation of AQP2-containing vesicles to the apical plasma membrane, increasing the osmotic water permeability of CD cells. Moreover, AVP induces transcription of the Aqp2 gene, increasing AQP2 protein abundance. This review provides new insights into the transcriptional regulation of the Aqp2 gene in the kidney CD with an overview of AVP and AQP2. It summarizes current therapeutic approaches for X-linked nephrogenic diabetes insipidus caused by AVPR2 gene mutations.