The contents of endocytic vesicles and other intracellular organelles (such as Golgi and microsomes) are acidified by an electrogenic proton-translocating ATPase that is remarkably similar to that found in urinary epithelia. We recently found that the number of H+ ATPases in the apical plasma membrane of these epithelia is regulated by exocytotic insertion of endocytic vesicles whose membranes contain this H+ pump. Carbon dioxide, a major stimulus for urinary acidification, causes rapid fusion of these vesicles with the luminal membrane, thereby inserting these pumps there and increasing the rate of net transepithelial H+ secretion; CO2 also inhibits endocytic retrieval of the pumps from the luminal membrane. Such reciprocal regulation of endocytosis and exocytosis by a physiological modulator makes this system particularly attractive for studying the cellular events regulating membrane fusion. Here we present evidence that CO2 induces exocytosis by a cascade of events, the first step of which is cytoplasmic acidification. Cell acidification then increases calcium activity, which causes the fusion event.