Diabetic Nephropathy (DN) is the commonest cause of end-stage renal failure (ESRF) in the Western world. Diabetic nephropathy follows a well outline clinical course, starting with microalbuminuria through proteinuria, azotaemia and culminating in ESRF. Before the onset of overt proteinuria, there are various renal functional changes including renal hyperfiltration, hyperperfusion, and increasing capillary permeability to macromolecules. Basement-membrane thickening and mesangial expansion have long been recognized as pathological hallmark of diabetes. It has been postulated that DN occurs as a result of the interplay of metabolic and hemodynamic factors in the renal microcirculation. There is no doubt that there is a positive relationship between hyperglycaemia, which is necessary but not sufficient, and microvascular complications. The accumulation of advanced glycosylated end-products (AGEs), the activation of isoform(s) of protein kinase C (PKC) and the acceleration of the aldose reductase pathway may explain how hyperglycemia damages tissue. PKC is one of the key signaling molecules in the induction of the vascular pathology of diabetes. The balance between extracellular matrix production and degradation is important in this context. Transforming growth factor-beta (TGF-beta) appears to play a pivotal role in accumulation in the diabetic kidney. Hemodynamic disturbances are believed to be directly responsible for the development of glomerulosclerosis and its attendant proteinuria. There is familial clustering of diabetic kidney disease. A number of gene loci have been investigated to try to explain the genetic susceptibility to diabetic nephropathy. The genes coding for components of renin-angiotensin system have drawn special attention, due to the central role that this system plays in the regulation of blood pressure, sodium metabolism, and renal hemodynamics. Endothelial dysfunction is closely associated with the development of diabetic retinopathy, nephropathy and atherosclerosis, both in IDDM and in NIDDM. The pathogenesis of diabetic nephropathy is not clarified completely yet.