Osmotic-response element-binding protein (OREBP), also known as TonEBP or NFAT5, is thought to be responsible for the induction of osmolyte-accumulating genes when cells are under hypertonic stress. Recent studies suggest that OREBP also plays a role in water reabsorption in the kidney, T-cell proliferation, and embryonic development. We developed transgenic mice that express the dominant-negative OREBP (OREBPdn) specifically in the lens because our earlier studies showed that it is particularly sensitive to osmotic stress. The transgenic mice developed nuclear cataract soon after birth, suggesting defects in lens development. The developing transgenic lenses showed incomplete elongation of fiber cells and formation of vacuoles. This is accompanied by evidence of DNA strand breaks, activation of p53, and induction of checkpoint kinase, suggesting that the developing fiber cells lacking OREBP are in a similar physiological state as cells experiencing hypertonic stress. These results indicate that OREBP-mediated accumulation of osmolytes is essential during elongation of the lens fiber cells.