The development of strategies to measure plasma membrane osmotic water permeability (Pf) in epithelial cells has been motivated by the identification of a family of molecular water channels. A general approach utilizing interferometry to measure cell shape and volume was developed and applied to measure Pf in cell layers. The method is based on the cell volume dependence of optical path length (OPL) for a light beam passing through the cell. The small changes in OPL were measured by interferometry. A mathematical model was developed to relate the interference signal to cell volume changes for cells of arbitrary shape and size. To validate the model, a Mach-Zehnder interference microscope was used to image OPL in an Madin Darby Canine Kidney (MDCK) cell layer and to reconstruct the three-dimensional cell shape (OPL resolution < lambda/25). As predicted by the model, a doubling of cell volume resulted in a change in OPL that was proportional to the difference in refractive indices between water and the extracellular medium. The time course of relative cell volume in response to an osmotic gradient was computed from serial interference images. To measure cell volume without microscopy and image analysis, a Mach-Zehnder interferometer was constructed in which one of two interfering laser beams passed through a flow chamber containing the cell layer. The interference signal in response to an osmotic gradient was analyzed to quantify the time course of relative cell volume. The calculated MDCK cell plasma membrane Pf of 6.1 x 10(-4) cm/s at 24 degrees C agreed with that obtained by interference microscopy and by a total internal reflection fluorescence method. Interferometry was also applied to measure the apical plasma membrane water permeability of intact toad urinary bladder; Pf increased fivefold after forskolin stimulation to 0.04 cm/s at 23 degrees C. These results establish and validate the application of interferometry to quantify cell volume and osmotic water permeability in cell layers.