Previous studies demonstrated that Ca2(+)-activated K+ channels in luminal membrane of rabbit medullary thick ascending limb cells (MTAL) are activated on exposure of the cells to hyposmotic solutions [J. Taniguchi and W. B. Guggino. Am. J. Physiol. 257 (Renal Fluid Electrolyte Physiol. 26): F347-F352, 1989]. In this study, we investigated the mechanism of activation of Ca2(+)-activated K+ channels in MTAL cells exposed to hyposmotic solutions. MTAL cells swell in hyposmotic medium and regulate volume back toward the starting volume. This regulatory volume decrease (RVD) is inhibited at high medium K+ concentrations or by presence of quinine or Ba2+ in extracellular medium, suggesting involvement of K+ channels. Measurements of intracellular Ca2+ concentrations with fura-2 show that intracellular Ca2+ rises in hyposmotic solutions and that this rise does not occur in absence of extracellular Ca2+. Nifedipine and verapamil also inhibit rise in intracellular Ca2+. Decreasing intracellular Ca2+ by removal of external Ca2+ in presence of EDTA or by chelation of intracellular Ca2+ with 1,2-bis(2-aminophenoxy)ethane-N,N,N',N'-tetraacetic acid (BAPTA) inhibits RVD. We conclude that hypotonic solutions activate K+ efflux probably via K+ channels and Ca2+ influx via a nifedipine- and verapamil-sensitive pathway. Lowering intracellular Ca2+ removes the ability of MTAL cells to regulate volume in hyposmotic solutions.