Lithium (Li)-induced nephrogenic diabetes insipidus (NDI) has been attributed to the increased production of renal prostaglandin (PG)E₂. Previously we reported that extracellular nucleotides (ATP/UTP), acting through P_2y2 receptor in rat medullary collecting duct (mCD), produce and release PGE₂. Hence we hypothesized that increased production of PGE₂ in Li-induced NDI may be mediated by enhanced purinergic signaling in the mCD. Sprague-Dawley rats were fed either control or Li-added diet for 14 or 21 days. Li feeding resulted in marked polyuria and polydipsia associated with a decrease in aquaporin (AQP)2 protein abundance in inner medulla (∼20% of controls) and a twofold increase in urinary PGE₂. When acutely challenged ex vivo with adenosine 5′-O-(3-thiotriphosphate) (ATPγS), UTP, or ADP, mCD of Li-fed rats showed significantly higher increases (50–130% over control diet-fed rats) in PGE₂ production, indicating that more than one subtype of P_2y receptor is involved. This was associated with a 3.4-fold increase in P_2y4, but not P_2y2, receptor mRNA expression in the inner medulla of Li-fed rats compared with control diet-fed rats. Confocal laser immunofluorescence microscopy revealed predominant localization of both P_2y2 and P_2y4 receptors in the mCD of control or Li diet-fed rats. Together, these data indicate that in Li-induced NDI 1) purinergic signaling in the mCD is sensitized with increased production of PGE₂ and 2) P_2y2 and/or P_2y4 receptors may be involved in the enhanced purinergic signaling. Our study also reveals the potential beneficial effects of P_2y receptor antagonists in the treatment and/or prevention of Li-induced NDI.