Regulation of cell volume in response to changes in osmolarity is critical for cell function and survival. However, the molecular basis of osmosensation and regulation of cell volume are not clearly understood. We have examined the mechanism of regulatory volume decrease (RVD) in salivary gland cells and report a novel association between osmosensing TRPV4 (transient receptor potential vanalloid 4) and AQP5 (aquaporin 5), which is required for regulating water permeability and cell volume. Exposure of salivary gland cells and acini to hypotonicity elicited an increase in cell volume and activation of RVD. Hypotonicity also activated Ca2+ entry, which was required for subsequent RVD. Ca2+ entry was associated with a distinct nonselective cation current that was activated by 4alphaPDD and inhibited by ruthenium red, suggesting involvement of TRPV4. Consistent with this, endogenous TRPV4 was detected in cells and in the apical region of acini along AQP5. Importantly, acinar cells from mice lacking either TRPV4 or AQP5 displayed greatly reduced Ca2+ entry and loss of RVD in response to hypotonicity, although the extent of cell swelling was similar. Expression of N terminus-deleted AQP5 suppressed TRPV4 activation and RVD but not cell swelling. Furthermore, hypotonicity increased the association and surface expression of AQP5 and TRPV4. Both these effects and RVD were reduced by actin depolymerization. These data demonstrate that (i) activation of TRPV4 by hypotonicity depends on AQP5, not on cell swelling per se, and (ii) TRPV4 and AQP5 concertedly control regulatory volume decrease. These data suggest a potentially important role for TRPV4 in salivary gland function.