Familial hypothalamic diabetes insipidus is an autosomal dominant disorder characterized by deficient vasopressin synthesis. Different point mutations in the vasopressin-neurophysin (VP-NP) precursor gene have been found in affected families. In a Dutch kindred, a single G to T transversion in the NP-encoding exon B of one allele converts the highly conserved glycine 17 to a valine residue. In order to examine whether this point mutation affects the processing and transport of the VP-NP precursor, the normal (HV2) and mutant (MT6) vasopressin cDNAs were stably expressed in the mouse pituitary cell line AtT20. The normal precursor was correctly glycosylated and processed, and NP was detected in the culture medium. Secretion of NP was stimulated by 8-bromo-cAMP, indicating that the normal precursor was targeted to the regulated secretory pathway. In contrast, the mutant precursor was synthesized, but processing and secretion were dramatically reduced. The mutant precursor was core-glycosylated but remained endoglycosidase H-sensitive, suggesting that the protein did not reach the trans-Golgi network. These results were supported by immunocytochemical studies. In HV2 cells, NP derived from the precursor was concentrated in the tips of the cell processes where secretory granules accumulate. In MT6 cells, NP staining was restricted to the endoplasmic reticulum (ER) as determined by colocalization with an ER-resident protein, BiP. These results suggest that the mutation within the conserved part of NP alters the conformation of the precursor and thus triggers its retention in the ER.