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Loss of polycystin-2 (PC2) in mice (Pkd2(-/-)) results in total body edema, focal hemorrhage, structural cardiac defects, abnormal left-right axis, hepatorenal and pancreatic cysts, and embryonic lethality. The molecular mechanisms by which loss of PC2 leads to these phenotypes remain unknown. We generated a model to allow targeted Pkd2 inactivation using the Cre-loxP system. Global inactivation of Pkd2 produced a phenotype identical to Pkd2(-/-) mice with undetectable PC2 protein and perinatal lethality. Using various Cre mouse lines, we found that kidney, pancreas, or time-specific deletion of Pkd2 led to cyst formation. In addition, we developed an immortalized renal collecting duct cell line with inactive Pkd2; these cells had aberrant cell-cell contact, ciliogenesis, and tubulomorphogenesis. They also significantly upregulated beta-catenin, axin2, and cMyc. Our results suggest that loss of PC2 disrupts normal behavior of renal epithelial cells through dysregulation of beta-catenin-dependent signaling, revealing a potential role for this signaling pathway in PC2-associated ADPKD.