The pathologic hallmarks of diabetic nephropathy are excess mesangial extracellular matrix (ECM) and mesangial cell proliferation. We previously showed that mesangial cell phenotypic changes play an important role in the pathogenesis of diabetic nephropathy. We concluded that phenotypic changes were present in bone marrow (BM)-derived mesangial cell progenitors, as transplantation of BM from db/db mice, a model of type 2 diabetic nephropathy, transferred the db genotype and a nephropathy phenotype to naive B6 mice recipients. The recipients did not develop diabetes; however, they did develop albuminuria and glomerular lesions mirroring those in the donors (i.e., glomerular hypertrophy, increased ECM, and increased cell number with cell proliferation). We found that matrix metalloproteinase 2 (MMP-2) facilitated invasion of the mesangial cells into ECM and proliferation in vitro. Thus, increased MMP-2 activity in db/db mesangial cell progenitors may partially explain increased mesangial cell repopulation and proliferation in B6 recipients of db/db BM. In summary, BM-derived mesangial cell progenitors may play a crucial role in the development and progression of ECM accumulation and mesangial cell proliferation in this model of diabetic nephropathy in type 2 diabetes.