Ectonucleoside triphosphate diphosphohydrolase 1 (ENTPD1) (also known as CD39) is the dominant vascular ectonucleotidase. By hydrolyzing ATP and ADP to AMP, ENTPD1 regulates ligand availability to a large family of P2 (purinergic) receptors. Modulation of extracellular nucleotide metabolism is an important factor in several acute and subacute models of vascular injury. We hypothesized that aberrant nucleotide signaling would promote chronic glomerular injury in diabetic nephropathy. Inducing diabetes in ENTPD1-null mice with streptozotocin resulted in increased proteinuria and more severe glomerular sclerosis compared with matched diabetic wild-type mice. Diabetic ENTPD1-null mice also had more glomerular fibrin deposition and glomerular plasminogen activator inhibitor-1 (PAI-1) staining than wild-type controls. In addition, ENTPD1-null mice showed increased glomerular inflammation, in association with higher levels of monocyte chemoattractant protein-1 (MCP-1) expression. Mesangial cell PAI-1 and MCP-1 mRNA expression were upregulated by ATP and UTP but not ADP or adenosine in vitro. The stable nucleotide analog ATPgammaS stimulated sustained expression of PAI-1 and MCP-1 in vitro, whereas the stable adenosine analog NECA [5'-(N-ethylcarboxamido)adenosine] downregulated expression of both genes. Extracellular nucleotide-stimulated upregulation of MCP-1 is, at least in part, protein kinase C dependent. We conclude that ENTPD1 is a vascular protective factor in diabetic nephropathy that modulates glomerular inflammation and thromboregulation.