Regulatory volume decrease (RVD) is a key mechanism for volume control that serves to prevent detrimental swelling in response to hypo-osmotic stress. The molecular basis of RVD is not understood. Here we show that a complex containing aquaporin-4 (AQP4) and transient receptor potential vanilloid 4 (TRPV4) is essential for RVD in astrocytes. Astrocytes from AQP4-KO mice and astrocytes treated with TRPV4 siRNA fail to respond to hypotonic stress by increased intracellular Ca²⁺ and RVD. Coimmunoprecipitation and immunohistochemistry analyses show that AQP4 and TRPV4 interact and colocalize. Functional analysis of an astrocyte-derived cell line expressing TRPV4 but not AQP4 shows that RVD and intracellular Ca²⁺ response can be reconstituted by transfection with AQP4 but not with aquaporin-1. Our data indicate that astrocytes contain a TRPV4/AQP4 complex that constitutes a key element in the brain's volume homeostasis by acting as an osmosensor that couples osmotic stress to downstream signaling cascades.