Copied and pasted from my notes service....
....it has been determined that the beneficial effect is mediated through plasma volume reduction with an attendant fall in GFR, enhanced proximal reabsorption of NaCl and water and decreased delivery of fluid to the diluting segments. Thus, the maximum volume of DILUTE urine that can be produced is lowered. This seemingly paradoxical effect of thiazides can significantly reduce urine flow in the polyuric patient.