In this paper, the two warehouse inventory problem for deteriorating items with exponentially increasing time demand rate and shortages is considered. Here existing storage is known as own warehouse OW and the other is hired on rental basis known as rented warehouse RW. The model allows different levels of item deteriorat ion in both warehouses. Here replen ishment rate is fin ite. The stock is transferred fro m RW to OW in continuous release pattern and the associated transportation cost is taken into account. Shortage in OW is allowed and excess demand is backlogged. An attempt is made to incorporate the different preservation facilities in own and rented warehouses for deteriorating items with exponentially time dependent demand. It is also assume that the preservation facility in RW is better than OW. For the general model, we give the equations for the optimal policy and cost function and we discuss some special case. A numerical examp le is given to illustrate the solution procedure of the model.