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 (3H)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 apical 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.