In a previous study we demonstrated that indomethacin potentiated the hydro-osmotic action of vasopressin in vivo. It was hypothesized that this action of indomethacin was due to its ability to suppress renal medullary prostaglandin synthesis, since in vitro studies have suggested that prostaglandins interfere with the ability of vasopressin to stimulate production of its intracellular mediator, cyclic AMP. In the present study this hypothesis was tested in vivo. Anesthetized rats undergoing a water diuresis were studied. In a control group, bolus injections of 200 muU of vasopressin caused a rise in urinary osmolality (Uosm) from 124 +/- 6 to 253 +/- 20 mosmol/kg H2O (P less than 0.005). In a group treated with 2 mg/kg of indomethacin the same dose of vasopressin caused a significantly greater (P less than 0.001) rise in Uosm from 124 +/- 7 to 428 +/- 19 mosmol/kg H2O. Medullary tissue cyclic AMP rose from 9.4 +/- 0.9 to 13.4 +/- 1.7 (P less than 0.05) pmol/mg tissue protein after vasopressin administration in animals receiving no indomethacin, while in indomethacin-treated animals there was a significantly greater rise (P less than 0.001) in medullary cyclic AMP from 10.4 +/- 0.9 to 21.6 +/- 2.1 pmol/mg tissue protein in response to the vasopressin injections. In neither control animals nor indomethacin-treated animals were there significant changes in renal hemodynamics, as measured by clearance techniques. Indomethacin, when given alone, had no effect on Uosm or medullary tissue cyclic AMP. Indomethacin did, however, reduce medullary prostaglandin E content from 84.7 +/- 15.0 to 15.6 +/- 4.3 pg/mg tissue. This study has shown that indomethacin, in a dose which suppresses medullary prostaglandin content, potentiates the ability of vasopressin to increase the tissue content of its intracellular mediator, cyclic AMP. Indomethacin caused no demonstrable inhibition of cyclic AMP phosphodiesterase. Therefore, it seems likely that indomethacin enhanced the ability of vasopressin to increase medullary cyclic AMP levels by causing an increased production rather than decreased destruction of the nucleotide. We conclude that this action of indomethacin contributes to its ability to potentiate the hydro-osmotic action of vasopressin in vivo. A corollary to this conclusion is that endogenous medullary prostaglandin E's may be significant physiological modulators of the renal response to vasopressin.