To assess sites and mechanism of action of prostaglandin E2 (PGE2) on water permeability (PF), we determined PGE2 effects on antidiuretic hormone (ADH)- and adenosine 3',5'-cyclic monophosphate (cAMP)-stimulated PF in rat terminal inner medullary collecting ducts perfused in vitro. PGE2 (10(-7) M) reversibly inhibited ADH-stimulated PF (1.131 +/- 192 to 532 +/- 208 microns/s). In contrast to that observed in rabbit, PGE2 also inhibited an established PF response to the exogenous cAMP analogue 8-p-(chlorophenylthio)-cAMP (696 +/- 107 to 399 +/- 99 microns/s). PGE2 alone had no effect on PF. The protein kinase C inhibitor staurosporine (10(-8) M) blocked PGE2-mediated inhibition of cAMP-stimulated PF. PGE2 caused a rapid spikelike increase in intracellular calcium [( Ca2+]i) followed by a stable elevation above basal values. Only the latter effect was abolished in a zero calcium bath. Neither staurosporine nor cAMP altered the [Ca2+]i response. These studies are the first to demonstrate PGE2-mediated inhibition of an established PF response to cAMP independent of changes in intracellular cAMP. The pattern of [Ca2+]i release and sensitivity to staurosporine suggests that this effect is mediated via signaling through phospholipase C. The results underscore the importance of species differences, axial heterogeneity, and/or in vivo conditioning for functional expression of cellular signaling pathways.