Its activity is mediated by the Gs type of G proteins, which stimulate adenylate cyclase.

In the kidney, AVPR2's primary property is to respond to arginine vasopressin by stimulating mechanisms that concentrate the urine and maintain water homeostasis in the organism.

When the function of AVPR2 is lost, the disease nephrogenic diabetes insipidus (NDI) results.

Vasopressin receptor antagonists that are selective for the V2 receptor include: Their main uses are in hyponatremia, such as that caused by syndrome of inappropriate antidiuretic hormone (SIADH) and heart failure, however these agents should be avoided in patients with cirrhosis.

[8][9] Vasopressin receptor 2 function has been shown to be deleteriously effected by point mutations in its gene.