The collecting duct of the mammalian kidney is important for the regulation of extracellular volume, osmolarity, and pH. There are two major structurally and functionally distinct cell types: principal cells and intercalated cells. The former regulates Na and water homeostasis, while the latter participates in acid-base homeostasis. In vivo lineage tracing using Cre recombinase or its derivatives such as CreGFP and CreER is a powerful new technique to identify stem/progenitor cells in their native environment and to decipher the origins of the tissue that they give rise to. Recent studies using this technique in mice have revealed multiple renal progenitor cell populations that differentiate into various nephron segments and collecting duct. In particular, emerging evidence suggests that like principal cells, most of intercalated cells originate from the progenitor cells expressing water channel Aquaporin 2. Mutations or malfunctions of the channels, pumps, and transporters expressed in the collecting duct system cause various human diseases. For example, gain-of-function mutations in ENaC cause Liddle's syndrome, while loss-of-function mutations in ENaC lead to Pseudohypoaldosteronism type 1. Mutations in either AE1 or V-ATPase B1 result in distal renal tubular acidosis. Patients with disrupted AQP2 or AVPR2 develop nephrogenic diabetes insipidus. A better understanding of the function and development of the collecting duct system may facilitate the discovery of new therapeutic strategies for treating kidney disease.