The origin of the vacuoles that form in the mammalian collecting duct during antidiuretic hormone (ADH)-mediated water reabsorption was examined using two computer-assisted, light microscopic methods. First, differential interference-contrast microscopy was used in combination with a simple morphometric procedure to quantitatively characterize the time course, magnitude, and cell specificity of vacuole formation in the microperfused rabbit cortical collecting tubule. Second, video-intensified fluorescence microscopy was used to visualize the basolateral endocytosis of a fluorescent, fluid-phase marker (i.e., lucifer yellow) during vacuole formation. In the presence of a lumen-to-bath osmotic gradient, ADH addition induced the rapid (less than 10 min) formation of large (1- to 3-micron diam) vacuoles in principal cells and, to a lesser extent, in a subpopulation of intercalated cells. The vacuoles subsequently shrank and disappeared over the course of 60-90 min in the continued presence of the hormone and osmotic gradient. The vacuoles collapsed very slowly after elimination of the osmotic gradient at the peak of the vacuolation response, which implies that these structures are intracellular compartments rather than dilated extracellular spaces. During their formation the vacuoles could be loaded with peritubular (but not luminal) lucifer yellow, which remained trapped within most of these structures well after the dye was removed from the bath (greater than 30 min). These results indicate that most vacuoles that form during ADH-mediated water reabsorption are intracellular, endocytic compartments that communicate with the peritubular space via endocytosis of basolateral cell membrane.