Cholangiocytes line the intrahepatic bile ducts and regulate salt and water secretion during bile formation, but the mechanism(s) regulating ductal water movement remains obscure. A water-selective channel, the aquaporin CHIP, was recently described in several epithelia, so we tested the hypothesis that osmotic water movement by cholangiocytes is mediated by CHIP. Isolated rodent cholangiocytes showed a rapid increase in volume in the presence of hypotonic extracellular buffers; the ratio of osmotic to diffusional permeability coefficients was > 10. The osmotically induced increase in cholangiocyte volume was inversely proportional to buffer osmolality, independent of temperature, and reversibly blocked by HgCl2. Also, the luminal area of isolated, enclosed bile duct units increased after exposure to hypotonic buffer and was reversibly inhibited by HgCl2. RNase protection assays, anti-CHIP immunoblots, and immunocytochemistry confirmed that CHIP transcript and protein were present in isolated cholangiocytes but not in hepatocytes. These results demonstrate that (i) isolated cholangiocytes and intact, polarized bile duct units manifest rapid, mercury-sensitive increases in cell size and luminal area, respectively, in response to osmotic gradients and (ii) isolated cholangiocytes express aquaporin CHIP at both the mRNA and the protein level. The data implicate aquaporin water channels in the transcellular movement of water across cholangiocytes lining intrahepatic bile ducts and provide a plausible molecular explanation for ductal water secretion.