Polycystin-2, the product of the gene mutated in type 2 autosomal dominant polycystic kidney disease (ADPKD), is the prototypical member of a subfamily of the transient receptor potential (TRP) channel superfamily, which is expressed abundantly in the endoplasmic reticulum (ER) membrane. Here, we show by single channel studies that polycystin-2 behaves as a calcium-activated, high conductance ER channel that is permeable to divalent cations. Epithelial cells overexpressing polycystin-2 show markedly augmented intracellular calcium release signals that are lost after carboxy-terminal truncation or by the introduction of a disease-causing missense mutation. These data suggest that polycystin-2 functions as a calcium-activated intracellular calcium release channel in vivo and that polycystic kidney disease results from the loss of a regulated intracellular calcium release signalling mechanism.