Most patients with autosomal dominant polycystic kidney disease (ADPKD) harbor mutations truncating polycystin-1 (PC1) or polycystin-2 (PC2), products of the PKD1 and PKD2 genes, respectively. A third member of the polycystin family, polycystin-L (PCL), was recently shown to function as a Ca2+-modulated nonselective cation channel. More recently, PC2 was also shown to be a nonselective cation channel with comparable properties to PCL, though the membrane targeting of PC2 likely varies with cell types. Here we show that PC2 expressed heterologously in Xenopus oocytes is targeted to intracellular compartments. By contrast, a truncated form of mouse PC2 corresponding to a naturally occurring human mutation R742X is targeted predominantly to the plasma membrane where it mediates K+, Na+, and Ca2+ currents. Unlike PCL, the truncated form does not display Ca2+-activated transport activities, possibly due to loss of an EF-hand at the C-terminus. We propose that PC2 forms ion channels utilizing structural components which are preserved in the R742X form of the protein, Implications for epithelial cell signaling are discussed. © 2001 Academic Press.