The renal medulla is a rich source of prostaglandins. Two cell types, the collecting tubule epithelium and the interstitial cell, have the enzymatic machinery necessary to make prostaglandins. As a result of this localized production and the proximity to highly specialized medullary structures, the prostaglandins can exert potent effects on several aspects of medullary function. At least three physiologic effects have been clearly documented: reduction of vasopressin-dependent osmotic water permeability of the collecting tubule epithelium, enhancement of medullary blood flow, and inhibition of NaCl absorption from the thick ascending limb of Henle's loop. These three functions are the functions that primarily regulate axial solute content and water excretion. The effect of increasing medullary prostaglandin production is to reduce medullary solute content and increase water excretion. Each action in this regard. The medullary prostaglandins thus antagonize the ultimate action of vasopressin. In addition to the direct antagonistic effect on vasopressin-dependent osmotic water flow across the collecting tubule, prostaglandins and vasopressin may have antagonistic effects at other sites. These actions of medullary prostaglandins provide an integrated mechanism for the "fine tuning" of water excretion.