Rodents from arid and semi-arid habitats live under conditions where the spatial and temporal availability of free water is limited, or scarce, thus forcing these rodents to deal with the problem of water conservation. The response of rodents to unproductive desert environments and water deficits has been intensively investigated in many deserts of the world. However, current understanding of the cellular, systemic and organismal physiology of water economy relies heavily on short-term, laboratory-oriented experiments, which usually focus on responses at isolated levels of biological organization. In addition, studies in small South American mammals are scarce. Indeed xeric habitats have existed in South America for a long time and it is intriguing why present day South American desert rodents do not show the wide array of adaptive traits to desert life observed for rodents on other continents. Several authors have pointed out that South American desert rodents lack physiological and energetic specialization for energy and water conservation, hypothesizing that their success is based more on behavioral and ecological strategies. We review phenotypic flexibility and physiological diversity in water flux rate, urine osmolality, and expression of water channels in South American desert-dwelling rodents. As far as we know, this is the first review of integrative studies at cellular, systemic and organismal levels. Our main conclusion is that South American desert rodents possess structural as well as physiological systems for water conservation, which are as remarkable as those found in "classical" rodents inhabiting other desert areas of the world.