Isotocin (IT), a nonapeptide homolog of oxytocin in mammals, has been suggested to be involved in physiological processes including social behaviors, stress responses, and osmoregulation in teleost fish. To study its structure and function, the gene encoding the IT precursor was cloned from the genomic DNA and brain cDNA of the cinnamon clownfish, Amphiprion melanopus. The IT precursor gene consists of three exons separated by two introns, and encodes an open reading frame of 156 amino acid (aa) residues, comprising a putative signal peptide of 19 aa, a mature IT protein of 9 aa, a proteolytic processing site of 3 aa, and 125 aa of neurophysin. Tissue-specific analysis of the IT precursor transcript indicated its expression in the brain and gonads of A. melanopus. To examine its osmoregulatory effects, the salinity of the seawater (34 ppt) used for rearing A. melanopus was lowered to 15 ppt. Histological analysis of the gills indicated the apparent disappearance of an apical crypt on the surface of the gill lamella of A. melanopus, as pavement cells covered the surface upon acclimation to the lower salinity. The level of NaATPase activity in the gills was increased during the initial stage of acclimation, followed by a decrease to its normal level, suggesting its involvement in osmoregulation and homeostasis. The only slight increase in the level of IT precursor transcript in the A. melanopus brain upon low-salinity acclimation suggested that IT played a minor role, if any, in the process of osmoregulation.