A number of novel genes that are up-regulated in diabetic kidneys have been identified. Recently, transforming growth factor-beta (TGF-beta)--driven secreted proteins, i.e., connective tissue growth factor (CTGF) and gremlin, were identified. They are up-regulated in kidneys of diabetic animals and modulate the biology of mesangial cells. CTGF mediates TGF-beta--induced matrix overproduction by the mesangial cells. Gremlin is a putative antagonist of bone morphogenetic protein-2 that blocks mesangial cell proliferation. Thus, gremlin may modulate the biology of mesangium by stimulating mesangial cell proliferation and in turn production of matrix. In addition, transcriptionally regulated kinases, serum glucocorticoid-regulated kinase and munc-13 have been identified. The former stimulates renal tubular Na+ transport and is involved in hyperfiltraion of diabetic kidneys by a Na+ transport feedback mechanism. Munc-13 has been shown to induce apoptosis in hyperglycemic state via diacylglycerol-activated, PKC-independent signaling pathway. Another pathway relevant to diabetic nephropathy is polyol pathway, where glucose is reduced to sorbitol by aldose reductase. Recently, a renal-specific reductase of the aldo-keto reductase family was isolated. It is up-regulated in diabetic mice, and this could serve as a suitable target for gene therapy in renal complications of diabetes. Several mitochondrial genome-encoded genes, such as, cytochrome oxidase and NADH dehydrogenase, are up-regulated in diabetic kidneys. A novel nuclear-encoded mitochondrial gene, i.e., translocase inner mitochondrial membrane 44 (Tim44), is up-regulated in diabetic kidneys, and it may also serve as another target for molecular therapeutic intervention at the core storage energy sites, i.e., mitochondria. In this review, these novel differentially regulated genes that respond to hyperglycemic stress are described, and they may serve as possible targets for gene therapy in the treatment of diabetic nephropathy.