Diabetic renal fibrosis is a common cause of end-stage renal disease, and the circRNA-miRNA-mRNA network may play an important role in the progression of diabetic nephropathy- (DN-) induced renal fibrosis. In this study, the role of circ_000166/miR-296/SGLT2 in the process of DN-related renal fibrosis was studied by constructing an animal model of DN renal fibrosis via lentiviral transfection, plasmid transfection, and dual-luciferase reporting techniques. Compared with that of normal controls, the expression of circ_000166 in the kidney tissues of DN renal fibrosis mice substantially increased. Silencing circ_000166 could minimize kidney damage and decrease urine protein levels, thereby inhibiting the progression of renal fibrosis. Moreover, circ_000166 could act as the ceRNA of miR-296 and competitively bind to miR-296, leading to an increase in the expression of the SGLT2 gene regulated by miR-296. Through mutual verification via in vivo and in vitro experiments, miR-296 was overexpressed and SGLT2 was silenced. Results showed that DN renal fibrosis and cell apoptosis were considerably reduced. We postulate that circ_000166/miR-296/SGLT2 may become a new target in the progression of DN renal fibrosis, and the regulation of this pathway may be a promising strategy for clinical treatment of DN renal fibrosis.