By virtue of its unique interactions with kidney cells, lithium became an important research tool in renal physiology and pathophysiology. Investigators have uncovered the intricate relationships of lithium with the vasopressin and aldosterone systems, and the membrane channels or transporters regulated by them. While doing so, their work has also led to 1) questioning the role of adenylyl cyclase activity and prostaglandins in lithium-induced suppression of aquaporin-2 gene transcription; 2) unraveling the role of purinergic signaling in lithium-induced polyuria; and 3) highlighting the importance of the epithelial sodium channel (ENaC) in lithium-induced nephrogenic diabetes insipidus (NDI). Lithium-induced remodeling of the collecting duct has the potential to shed new light on collecting duct remodeling in disease conditions, such as diabetes insipidus. The finding that lithium inhibits glycogen synthase kinase-3β (GSK3β) has opened an avenue for studies on the role of GSK3β in urinary concentration, and GSK isoforms in renal development. Finally, proteomic and metabolomic profiling of the kidney and urine in rats treated with lithium is providing insights into how the kidney adapts its metabolism in conditions such as acquired NDI and the multifactorial nature of lithium-induced NDI. This review provides state-of-the-art knowledge of lithium as a versatile tool for understanding the molecular physiology of the kidney, and a comprehensive view of how this tool is challenging some of our long-standing concepts in renal physiology, often with paradigm shifts, and presenting paradoxical situations in renal pathophysiology. In addition, this review points to future directions in research where lithium can lead the renal community.