Electrolyte and water balance are tightly regulated by the host in the gastrointestinal tract. Inflammatory bowel diseases, namely Crohn’s disease and ulcerative colitis, are associated with decreased absorption and impaired secretion, leading to impaired barrier function characterized by the development of diarrhea. Aquaporin (AQP) 3 is highly expressed in epithelial cells of the gastrointestinal tract and may be involved in the transcellular transport of water across the intestinal epithelium. We hypothesized that AQP3 expression and localization in intestinal epithelial cells are altered in intestinal inflammation and that these changes are driven by the inflammatory cytokines tumour necrosis factor (TNF) α and interferon (IFN) γ. Our studies revealed that AQP3 protein is expressed in the basolateral membrane of both human and mouse colonic epithelial cells. In mice, AQP3 was downregulated in distal colonic epithelial cells early in colitis. These changes could be reproduced in HT-29 adenocarcinoma cells treated with two cytokines involved in intestinal inflammation. Specifically, TNFα downregulated AQP3 mRNA transcription through both MEK/ERK and NF-κB signalling, acting on the transcription factor specificity protein (Sp) 3 found bound to the AQP3 promoter. In contrast, IFNγ downregulated AQP3 mRNA transcription independent of JAK2 signalling, but required signal transducer and activator of transcription (STAT) 1, whereas STAT3 appeared to be involved in the constitutive repression of AQP3 expression. Mechanisms regulating AQP3 transcription are similar to those regulating numerous ion channels involved in absorption and secretion, suggesting a common mechanism by which both ion and water transport are altered in inflammation.