Diabetic nephropathy is continuing to rise in incidence, despite awareness of tight glycemic control and blood pressure. The identification that matrix accumulation is driven by transforming growth factor-beta (TGF-beta) has led to a concerted effort to apply antifibrotic strategies for this disorder. Recent studies have not only demonstrated the beneficial effects of blocking TGF-beta on matrix accumulation but have also found that blocking TGF-beta may have important hemodynamic effects that are relevant to diabetic complications. In this article, we review the latest knowledge regarding the role of TGF-beta in diabetic kidney disease and discuss available and novel therapeutic approaches. The role of a novel antifibrotic drug, pirfenidone, may have important clinical relevance to diabetic nephropathy.