Indomethacin has been shown to cause fetal oliguria in humans and animals. This study was designed to test the hypothesis that indomethacin-induced fetal oliguria is mediated through the renal action of arginine vasopressin. Twenty-seven late-gestation (129 +/- 4 days [mean +/- SE]) chronically catheterized fetal sheep were studied. After a 1-hour control period fetal responses to indomethacin, 0.05 mg/kg given intravenously, followed by a 4-hour maintenance infusion (n = 9), were compared with an identical indomethacin infusion plus an arginine vasopressin V2-receptor antagonist (d[CH2]1(5), D-Phe2, Ile4,Arg8,Ala9)-VP (n = 8) or vehicle alone (n = 10). Fetal arterial and venous pressures, heart rate, and urinary flow were measured continuously. Fetal urinary flow rate (p < 0.0001) and free water clearance (p = 0.004) fell in response to indomethacin alone, but the addition of the arginine vasopressin V2-receptor antagonist blocked indomethacin's oliguric and free water effect. Urinary osmolality and sodium increased in both indomethacin and indomethacin+arginine vasopressin V2-receptor antagonist groups compared with vehicle (p < 0.05). Fetal arterial pressure increased in response to indomethacin, and the addition of the arginine vasopressin V2-receptor antagonist potentiated this response (p = 0.007). These results suggest that (1) fetal oliguria secondary to indomethacin is mediated through the stimulation of the renal arginine vasopressin V2-receptor and (2) prostaglandin synthesis inhibition may play a role in renal tubular sodium handling. In addition, the arginine vasopressin V2-receptor plays a role in ameliorating the hypertensive response to indomethacin. We speculate that indomethacin stimulates circulating arginine vasopressin levels and enhances peripheral arginine vasopressin effects in the fetus, resulting in oliguria and hypertension.