The pathophysiology of sodium and water retention in heart failure is discussed in the context of a unifying hypothesis of body fluid volume regulation. Critical to this hypothesis is the maintenance of arterial circulatory integrity, which can be disturbed by either a reduction in cardiac output or a fall in systemic vascular resistance secondary to arterial vasodilatation, as seen in high output heart failure. The filling of the arterial circulation is sensed by receptors in the left ventricle, carotid artery, aortic arch and renal afferent arteriole. Effector mechanisms involve non-osmotic vasopressin synthesis and release, the renin-angiotensin-aldosterone system and the sympathetic nervous system. In low output heart failure non-peptide selective orally active vasopressin V2-receptor antagonists correct the hyponatremia, hypoosmolality, and water retention and decrease urinary aquaporin-2 water channels, supporting the role of vasopressin in the water retention seen in heart failure. In advanced heart failure aldosterone escape does not occur because of diminished distal delivery of sodium which also contributes to the resistance to atrial natriuretic peptide seen in heart failure. In high output cardiac failure arterial underfilling associated with arterial vasodilation stimulates activation of neurohumoral systems. Tailored specific selective inhibition of these neurohumoral systems, perhaps in combination, may enable more effective treatment of cardiac failure.