Hyponatremia due to elevated arginine vasopressin (AVP) secretion increases mortality in liver failure patients. The mechanisms causing dysregulation of AVP secretion are unknown. Our hypothesis is that inappropriate AVP release associated with liver failure is due to increased brain-derived neurotrophic factor (BDNF) in the supraoptic nucleus (SON). BDNF diminishes GABAA inhibition in SON AVP neurons by increasing intracellular chloride through tyrosine receptor kinase B (TrkB) activation and downregulation of K+/Cl- cotransporter 2 (KCC2). This loss of inhibition could increase AVP secretion. This hypothesis was tested using shRNA against BDNF (shBDNF) in the SON in bile duct ligated (BDL) male rats. All BDL rats had significantly increased liver weight (p < 0.05; 6-9) compared to shams. BDL rats with control -shRNA injections (BDL scrambled [SCR]) developed hyponatremia with increased plasma AVP and copeptin (CPP; all p < 0.05; 6-9) compared to sham groups. This is the first study to show that phosphorylation of TrkB is significantly increased along with significant decrease in phosphorylation of KCC2 in BDL SCR rats compared to the sham rats (p < 0.05;6-8). Knockdown of BDNF in the SON of BDL rats (BDL shBDNF) significantly increased plasma osmolality and hematocrit compared to BDL SCR rats (p < 0.05; 6-9). The BDL shBDNF rats had significant (p < 0.05; 6-9) decreases in plasma AVP and CPP concentration compared to BDL SCR rats. The BDNF knockdown also significantly blocked the increase in TrkB phosphorylation and decrease in KCC2 phosphorylation (p < 0.05; 6-8). The results indicate that BDNF produced in the SON contributes to increased AVP secretion and hyponatremia during liver failure.