A novel prolactin receptor (OmPRLR2) was identified and cloned in the euryhaline fish Oreochromis mossambicus using the suppression subtractive hybridization approach based on its response to hyperosmotic stress. OmPRLR2 protein has 55% identity with a known tilapia PRLR and 50% identity with human PRLR. Expression of OmPRLR2 was detected mainly in osmoregulatory organs (gills, intestine and kidney) but also in brain and muscle. Expression of the two tilapia PRLR differs in response to osmotic stress; OmPRLR1 expression is augmented during hypoosmotic stress but OmPRLR2 expression increased during hyperosmotic stress. Expression levels and tissue distribution of OmPRLR2 protein were quantified using specific antibodies, confirming its overexpression during hyperosmotic stress in gill cells. Stably transfected HEK‐293 cell lines overexpressing Tet‐inducible OmPRLR1 and OmPRLR2 were established. Receptors were functionally characterized using a casein promoter reporter system and through the analysis of expression of different prolactin (PRL) and growth hormone (GH) responsive genes. Specific responses of tilapia PRL177, tilapia PRL188, ovine PRL and tilapia GH were analyzed and show strong specificities for the ligands and resulting in activation of different signal transduction pathways. Additionally, cell lines expressing OmPRLR2 have increased tolerance to hyperosmotic media. Our results indicate that OmPRLR2 is a novel receptor contributing to osmosensory signal transduction in euryhaline fish.This work was supported by a grant from the National Science Foundation (IOB‐0542755).