The inner medullary collecting duct (IMCD) has been proposed to be a site of atrial natriuretic factor (ANF) action. We carried out experiments in isolated perfused terminal IMCDs to determine whether ANF (rat ANF 1-28) affects either osmotic water permeability (Pf) or urea permeability. In the presence of a submaximally stimulating concentration of vasopressin (10(-11) M), ANF (100 nM) significantly reduced Pf by an average of 46%. Lower concentrations of ANF also significantly inhibited vasopressin-stimulated Pf by the following percentages: 0.01 nM ANF, 18%; 0.1 nM, 46%; 1 nM, 48%. Addition of exogenous cyclic GMP (0.1 mM) mimicked the effect of ANF, decreasing Pf by an average of 48%. ANF also inhibited cyclic AMP-stimulated Pf by an average of 31%. ANF did not affect urea permeability, nor did it alter vasopressin-stimulated cyclic AMP accumulation. We conclude that ANF at physiological concentrations causes a large inhibition of vasopressin-stimulated Pf in the rat terminal IMCD, and that cyclic GMP is the second messenger mediating the effect. ANF appears to act at a site distal to cyclic AMP generation in the chain of events linking vasopressin receptor binding to an increase in osmotic water permeability.