Disorders of water balance are a common feature of clinical practice. An understanding of the physiology and pathophysiology of the key endocrine regulator of water balance vasopressin (VP) is key to diagnosis and management of these disorders. Diabetes insipidus is the result of a lack of VP or (less commonly) resistance to the renal effects of the hormone. Diagnostic testing can clarify aetiology and direct appropriate management. VP production can be associated with hyponatraemia. A comprehensive assessment of cardiovascular status and pharmacological influences are needed in these circumstances to differentiate between primary (inappropriate) and secondary (appropriate) physiological VP production. As with diabetes insipidus, diagnostic testing can help define the aetiology of hyponatraemia and direct appropriate management. Patients with disorders of water balance benefit from a joint clinical and laboratory medicine approach to diagnosis and management.