Tubular basement membrane (BM) changes (dysmorphogenesis), cell proliferation, and fluid accumulation related to the altered location of Na,K-ATPase are purported essential key events in the development and progression of renal cysts. These changes were assessed daily in Phenol II (2-amino-4-hydroxyphenyl-5-phenyl thiazole)-treated rats, which rapidly develop marked and progressive cystic change of all collecting tubules (CT). At Day 1, 12% of CT were cystic and their BM were thickened severalfold. At Day 4, 30% of CT were cystic and their BM remained thickened. BM of cystic tubules showed decreased staining for heparan sulfate proteoglycan and increased staining for fibronectin. Proliferation, as determined by (H-3)thymidine, incorporation, was not significant until Day 2 and involved cystic and noncystic tubular cells as well as interstitial cells. As cystic changes progressed, cell proliferation decreased. By immunohistochemistry, the altered location of Na,K-ATPase in epithelial cells lining cysts was primarily detected after Day 2 and consisted of focal loss from basal and/or lateral cell membranes and localization in the cell cytoplasm. Only rarely was Na,K-ATPase localized to the apicol cell membrane. After the removal of Phenol II, cystic tubular cells, BM, and Na,K-ATPase returned to normal. Thus, in this model of polycystic kidney disease, initial cyst formation occurred in tandem with BM structural change whereas cell proliferation and altered location of Na,K-ATPase occurred after the appearance of cysts.