Tonicity-responsive enhancer binding protein (TonEBP) regulates transcription of tonicity responsive genes such as the sodium-myo-inositol cotransporter (SMIT), the sodium-chloride-betaine cotransporter (BGT1), and aldose reductase (AR). To characterize signals that activate TonEBP in Madin-Darby canine kidney (MDCK) cells, the abundance and nuclear distribution of TonEBP were studied after the osmolality of the culture medium was changed. Hypertonicity but not hyperosmolality is effective in activation of TonEBP as expected. Surprisingly, exposure to hypotonic medium leads to a dramatic downregulation of TonEBP both in abundance and nuclear distribution, indicating that under isotonic conditions, TonEBP is at a low-level activated state and can respond to both increase and decrease in tonicity. Additional experiments suggest that cellular ionic strength is the signal that initiates regulation of TonEBP. The increase in abundance of TonEBP is mediated by an increase in mRNA abundance and a parallel increase in synthesis of TonEBP. The stability of TonEBP mRNA is not affected by hypertonicity indicating that transcription plays a major role in the induction of TonEBP by hypertonicity.