Polycystic kidney disease is characterized by localized autonomous cellular proliferation, compartmentalized fluid accumulation within the cysts, and intraparenchymal fibrosis of the kidney. The clinical features include renal failure, liver cysts, and vascular and cardiac valve abnormalities. Recent developments have extended our understanding of cyst formation, fluid secretion, and the genetics of polycystic kidney disease. Two causal genes for polycystic kidney disease, PKD1 and PKD2, that are responsible for greater than 95% of cases of autosomal dominant polycystic kidney disease, have been identified and sequenced. The mechanisms of cystogenesis are being uncovered and the phenotypic features of cystic epithelial cells are being discovered. This review describes recent advances made in the molecular biology of the genetic causes of polycystic kidney disease. The mechanistic details of cystogenesis are discussed and contrasted with the paradigms that guide current experimental approaches.