Autosomal dominant polycystic kidney disease (ADPKD) is a common and systemic disease characterized by formation of focal cysts. Of the three potential causes of cysts, downstream obstruction, compositional changes in extracellular matrix, and proliferation of partially dedifferentiated cells, evidence strongly supports the latter as the primary abnormality. In the vast majority of cases, the disease is caused by mutations in PKD1 or PKD2, and appears to be recessive at the cellular level. Somatic second hits in the normal allele of cells containing the germ line mutation initiate or accelerate formation of cysts. The intrinsically high frequency of somatic second hits in epithelia appears to be sufficient to explain the frequent occurrence of somatic second hits in the disease-causing genes. PKD1 and PKD2 encode a putative adhesive/ion channel regulatory protein and an ion channel, respectively. The two proteins interact directly in vitro. Their cellular and subcellular localization suggest that they may also function independently in a common signaling pathway that may involve the membrane skeleton and that links cell-cell and cell-matrix adhesion to the development of cell polarity.