Aquaporin-2 (AQP2) water channels in principal cells of the kidney collecting duct are essential for urine concentration. Due to application of modern technologies, progress in our understanding of AQP2 has accelerated in recent years. In this article, we highlight some of the new insights into AQP2 function that have developed recently, with particular focus on the cell biological aspects of AQP2 regulation. AQP2 is subjected to a number of regulated modifications, including phosphorylation and ubiquitination, which are important for AQP2 function, cellular localization and degradation. AQP2 is likely internalized via clathrin and non-clathrin-mediated endocytosis. Regulation of AQP2 endocytosis, in addition to exocytosis, is a vital mechanism in determining overall AQP2 membrane abundance. AQP2 is associated with regulated membrane microdomains. Studies using membrane cholesterol depleting reagents, for example statins, have supported the role of membrane rafts in regulation of AQP2 trafficking. Noncanonical roles for AQP2, for example in epithelial cell migration, are emerging. AQP2 function and thus urine concentration is dependent on a variety of cell signalling mechanisms, posttranslational modification and interplay between AQP2 and its lipid environment. This complexity of regulation allows fine-tuning of AQP2 function and thus body water homeostasis.