Transforming growth factor-beta (TGF-beta) is known to promote the accumulation of extracellular matrix (ECM) and the development of diabetic nephropathy. Halofuginone, an analog of febrifugine, has been shown to block TGF-beta(1) signaling and subsequent type I collagen production. Here, the inhibitory effect of halofuginone on diabetic nephropathy was examined. Halofuginone suppressed Smad2 phosphorylation induced by TGF-beta(1) in cultured mesangial cells. In addition, the expression of TGF-beta type 2 receptor decreased by halofuginone. Halofuginone showed an inhibitory effect on type I collagen and fibronectin expression promoted by TGF-beta(1). An in vivo experiment using db/db mice confirmed the ability of halofuginone to suppress mesangial expansion and fibronectin overexpression in the kidneys. Moreover, an analysis of urinary 8-OHdG level and dihydroethidium fluorescence revealed that halofuginone reduced oxidative stress in the glomerulus of db/db mice. These data indicate that halofuginone prevents ECM deposition and decreases oxidative stress, thereby suppressing the progression of diabetic nephropathy.