Endothelial nitric-oxide synthase (eNOS) acts as a common pathogenic pathway in diabetic nephropathy (DN). However, its functional consequences are still not fully understood. Caveolin, a membrane protein, inhibits the eNOS by making caveolin-eNOS complex, and its expression is upregulated during diabetes mellitus (DM). This study was designed to determine the role of caveolin in eNOS-mediated NO synthesis and release in DN. DM in rat was induced by feeding of high-fat diet (HFD) for 2 weeks, followed by single dose of streptozotocin (STZ) (35 mg/kg, ip) further followed by HFD for further 8 weeks. Serum nitrite/nitrate ratio was measured to determine the plasma level of NO. Diabetic rat, after 6 weeks of STZ, developed elevated level of BUN, protein in urine, urinary output, serum creatinine, serum cholesterol, kidney weight, kidney weight/body weight, and renal cortical collagen content, while serum nitrite/nitrate concentration was significantly decreased as compared to normal control group. Treatment with sodium nitrite (NO donor), L: -arginine (NO precursor), daidzein (caveolin inhibitor), and combination of L: -arginine and daidzein for 2 weeks markedly attenuated these changes and increased serum nitrite/nitrate ratio. However, treatment with L-NAME, a eNOS inhibitor, significantly attenuated the L: -arginine-, daidzein-, or combination of L: -arginine and daidzein-induced ameliorative effects in DN. The finding of this study suggests that caveolin plays a vital role in the eNOS-mediated decrease in renal level of NO, which may be responsible for the development of DN in rats.