Previously, we have reported that pigment epithelium-derived factor (PEDF) ameliorates albuminuria and inhibits matrix protein deposition in the kidney of streptozotocin (STZ)-induced diabetic rats, suggesting a renoprotective effect of PEDF in early stages of diabetic nephropathy. As inflammation is a major contributor to the development and progression of diabetic nephropathy, we examined in the present study whether PEDF inhibits renal inflammation in diabetic kidney. Diabetic rats received an intravenous injection of an adenovirus expressing PEDF (Ad-PEDF) or the same titer of a control virus. Three wk after the injection, diabetic rats treated with the control virus showed significantly elevated renal levels of proinflammatory factors such as ICAM-1, MCP-1, TNF-alpha, and VEGF compared with age-matched nondiabetic controls. Ad-PEDF effectively suppressed the overexpression of these proinflammatory factors in diabetic kidneys. In cultured primary human renal mesangial cells (HMC), the high-glucose medium-induced upregulation of VEGF and MCP-1 was largely blocked by PEDF. Furthermore, PEDF inhibited high glucose-induced activation of NF-kappaB, a key transcription factor mediating inflammatory responses, and hypoxia-inducible factor-1, a major activator of VEGF expression in HMC. These results suggest that the renoprotective effect of PEDF against diabetic nephropathy may be partially through its anti-inflammatory activity, likely by blocking the NF-kappaB and HIF-1 pathways.