Transient receptor potential (TRP) channels mediate a wide array of sensory functions. We investigated the role of TRPC5, a poorly characterized channel widely expressed in the central and peripheral nervous system, as a potential osmosensory protein. Here we show that hypoosmotic stimulation activates TRPC5 channels resulting in a large calcium influx. The response to osmotically-induced membrane stretch is blocked by GsMTx-4, an inhibitor of stretch activated ion channels. Direct hypoosmotic activation of TRPC5 is independent of phospholipase C function. However, the osmotic response is inhibited in a cell line in which PIP2 levels are reduced by regulated overexpression of a lipid phosphatase. The response was restored by increasing intracellular PIP2 levels through the patch pipette. The mechano-sensitivity of the channel was probed in the whole-cell configuration by application of steps of positive pressure through the patch pipette. Pressure-induced membrane stretch also activated TRPC5 channels, suggesting its role as a transducer of osmo-mechanical stimuli. We also demonstrated the expression of TRPC5 in sensory neurones which together with the osmo-mechanical characteristics of TRPC5 channels suggest its putative role in mechanosensory transduction events.