Vasopressin (AVP) induces antidiuresis, thus playing an essential role in body water and electrolyte homeostasis. Its antidiuretic effects are mediated chiefly by V2 vasopressin receptors (V2R) expressed along the distal nephron and collecting duct epithelia. NaCl reabsorption in the distal nephron, which includes the thick ascending limb (TAL) and distal convoluted tubule (DCT), largely depends on the activity of two structurally related Na-(K)-Cl cotransporters, NKCC2 in TAL and NCC in DCT. AVP-induced activation of these transporters contributes to urine concentration and renal electrolyte reabsorption. Previous work has specified molecular pathways mediating the effects of V2R activation in TAL and DCT, and protein networks involved in intracellular trafficking and phosphoregulation of the two transporters have been identified. This review summarizes recent progress in understanding AVP signalling mechanisms that are responsible for the activation of NKCC2 and NCC. Implications in the pathophysiology of diseases such as nephrogenic diabetes insipidus, diabetes mellitus and salt-sensitive hypertension are discussed in this context.