The transcription factor hepatocyte nuclear factor-1 (HNF-1) is essential for normal kidney development and function. Inactivation of HNF-1 in mouse kidney tubules leads to early-onset cyst formation and postnatal lethality. Here, we used Pkhd1/Cre mice to delete HNF-1 specifically in renal collecting ducts (CDs). CD-specific HNF-1 mutant mice survived long term and developed slowly progressive cystic kidney disease, renal fibrosis, and hydronephrosis. Compared with wild-type littermates, HNF-1 mutant mice exhibited polyuria and polydipsia. Before the development of significant renal structural abnormalities, mutant mice exhibited low urine osmolality at baseline and after water restriction and administration of desmopressin. However, mutant and wild-type mice had similar plasma vasopressin and solute excretion levels. HNF-1 mutant kidneys showed increased expression of aquaporin-2 mRNA but mislocalized expression of aquaporin-2 protein in the cytoplasm of CD cells. Mutant kidneys also had decreased expression of the UT-A urea transporter and collectrin, which is involved in apical membrane vesicle trafficking. Treatment of HNF-1 mutant mIMCD3 cells with hypertonic NaCl inhibited the induction of osmoregulated genes, including , which encodes the transcription factor FXR that is required for maximal urinary concentration. Chromatin immunoprecipitation and sequencing experiments revealed HNF-1 binding to the promoter in wild-type kidneys, and immunoblot analysis revealed downregulated expression of FXR in HNF-1 mutant kidneys. These findings reveal a novel role of HNF-1 in osmoregulation and identify multiple mechanisms, whereby mutations of HNF-1 produce defects in urinary concentration.