Tonicity responsive enhancer binding protein (TonEBP) is the transcription factor that regulates tonicity responsive expression of proteins that catalyze cellular accumulation of compatible osmolytes. In cultured MDCK cells, hypertonicity stimulates the activity of TonEBP via a combination of increased protein abundance and increased nuclear localization. For investigating regulation of TonEBP in the kidney, rats were subjected to water loading or dehydration. Water loading lowered urine osmolality and mRNA expression of sodium/myo-inositol cotransporter (SMIT), a target gene of TonEBP, in the renal medulla; dehydration doubled the urine osmolality and increased SMIT mRNA expression. In contrast, overall abundance of TonEBP and its mRNA measured by immunoblot and ribonuclease protection assay, respectively, was not affected. Immunohistochemical analysis, however, revealed that nuclear distribution of TonEBP is generally increased throughout the medulla in dehydrated animals compared with water loaded animals. Increased nuclear localization was particularly dramatic in thin limbs. Notable exceptions were the middle to terminal portions of the inner medullary collecting ducts and blood vessels, where a change in TonEBP distribution was not evident. Immunohistochemical detection of SMIT mRNA revealed that the changes in nuclear distribution of TonEBP correlate with expression of SMIT. It is concluded that under physiologic conditions, nucleocytoplasmic distribution is the dominant mode of regulation of TonEBP in the renal medulla.