In the long term, diabetes profoundly affects multiple organs, such as the kidney, heart, brain, liver, and eyes. The gradual loss of function in these vital organs contributes to mortality. Nonetheless, the effects of diabetes on the lung tissue are not well understood. Clinical and experimental data from our studies revealed that diabetes induces inflammatory and fibrotic changes in the lung. These changes were mediated by TGF-β-activated epithelial-to-mesenchymal transition (EMT) signaling pathways. Our studies also found that glucose restriction promoted mesenchymal-to-epithelial transition (MET) and substantially reversed inflammatory and fibrotic changes, suggesting that diabetes-induced EMT was mediated in part by the effects of hyperglycemia. Additionally, the persistent exposure of diabetic cells to high glucose concentrations (25 mM) promoted the upregulation of caveolin-1, N-cadherin, SIRT3, SIRT7 and lactate levels, suggesting that long-term diabetes may promote cell proliferation. Taken together, our results demonstrate for the first time that diabetes induces fibrotic changes in the lung via TGF-β1-activated EMT pathways and that elevated SMAD7 partially protects the lung during the initial stages of diabetes. These findings have implications for the management of patients with diabetes.