The transcription factor, tonicity-responsive enhancer binding protein (TonEBP), is involved in the adaptive response against hypertonicity. TonEBP regulates the expression of genes that catalyze the accumulation of osmolytes, and its transcriptional activity is increased by hypertonicity. The goal of the present investigation was to investigate whether cell shrinkage or high intracellular ionic concentration induced the activation of TonEBP. We designed a model system for isotonically shrinking cells over a prolonged period of time. Cells swelled in hypotonic medium and performed a regulatory volume decrease (RVD). Upon return to the original isotonic medium, cells shrank initially followed by a regulatory volume increase (RVI). To maintain cell shrinkage, the RVI process was inhibited as follows: Ethyl-isopropyl-amiloride (EIPA) inhibited the Na⁺/H⁺ antiport, Bumetanide inhibited the Na⁺/K⁺/2Cl^- co-transporter, and Gadolinium inhibited shrinkage-activated Na⁺ channels. Cells remained shrunken for at least 4 hours (isotonically shrunken cells). The activity of TonEBP was investigated with a Luciferase assay after isotonic shrinkage and after shrinkage in a high NaCl hypertonic medium. We found that TonEBP was strongly activated after 4 and 16 hours in cells in high NaCl hypertonic medium but not after 4 or 16 hours in isotonically shrunken cells. Cells treated with high NaCl hypertonic medium for 4 hours had significantly higher intracellular concentrations of both K⁺ and Na⁺ than isotonically shrunken cells. This strongly suggested that an increase in intracellular ionic concentration and not cell shrinkage is involved in TonEBP activation.