Renal nicotinamide adenine dinucleotide phosphate reduced form (NADPH) oxidase is an important source of oxidative stress and its expression is enhanced in the glomerulus and distal tubules of diabetic nephropathy. High glucose-induced protein kinase C signalling or renal angiotensin II signalling increases the membrane translocation of cytosolic component p47phox. NADPH oxidase-derived reactive oxygen species (ROS) in the podocytes damage the glomerular basement membrane and the slit diaphragm causing proteinuria, and mesangial and glomerular endothelial NADPH oxidase increase TGF-beta and cause collagen and fibronectin accumulation. Tubular NADPH oxidase stimulated by angiotensin II or aldosterone contributes to sodium retention and to tubulointerstitial damage. Thus, inhibition of the renal renin-angiotensin II-aldosterone system with angiotensin-converting enzyme inhibitor, angiotensin II type 1 receptor blocker or selective aldosterone inhibitor indirectly suppresses NADPH oxidase reducing renal ROS, proteinuria and glomerulosclerosis. Statins are also effective in blocking the membrane translocation of Rac, especially in diabetes with hypercholesterolemia where ROS is produced by the intrinsic NADPH oxidase and by the activated macrophages. A medical herb, picrorhiza, inhibits the membrane translocation of p47phox, is a specific inhibitor of NADPH oxidase and, more so than superoxide dismutase mimetics, may be a promising strategy for the treatment of diabetic nephropathy.