To identify molecules that might contribute to V2 vasopressin receptor (V2R) trafficking or signaling, we searched for novel interacting proteins with this receptor. Preliminary data, using the V2R C terminus as bait in a yeast two-hybrid screen, revealed calmodulin as a binding partner. Because calmodulin interacts with other G protein-coupled receptors, we explored this interaction and its possible functional relevance in greater detail. A Ca2+ -dependent interaction occurs between calmodulin-linked agarose and the holo-V2R as well as the V2R C terminus. Truncation and site-directed mutagenesis of the V2R C terminus revealed an involvement of an RGR sequence in this interaction. NMR studies showed that a peptide fragment of the V2R C terminus containing the RGR sequence binds to calmodulin in a Ca2+ -dependent manner with a Kd < or =1.5 microm; concentration-dependent binding of the V2R C terminus to calmodulin-agarose was used to estimate a Kd value of approximately 200 nm for this entire C-terminal sequence as expressed in mammalian cells. Madin-Darby canine kidney II cells stably expressing either wild type or a mutant V2R, in which the RGR C-terminal sequence was mutated to alanines (AAA V2R), revealed that the steady-state localization and agonist-induced internalization of the AAA V2R resembled that of the wild type V2R in polarized Madin-Darby canine kidney II cells. V2R binding of agonist similarly was unchanged in the AAA V2R, as was the concentration response for arginine vasopressin (AVP)-stimulated cAMP accumulation. Most interestingly, AVP-induced increases in intracellular Ca2+ observed for the wild type V2R were virtually eliminated for the AAA V2R. Taken together, the data suggest that a C-terminal region of the V2R important for calmodulin interaction is also important in modulation of V2R elevation of intracellular Ca2+, a prerequisite for AVP-induced fusion of aquaporin-containing vesicles with the apical surface of renal epithelial cells.