Diabetic nephropathy (DN) is the leading cause of end-stage failure of the kidney, but the efficacy of current strategies available for the prevention of DN remains unsatisfactory. The purpose of this study was to assess whether sitagliptin (SIT) has therapeutic potential for prevention of DN and to investigate its possible mechanism. The effects of SIT on DN were investigated in rats with type 2 diabetes mellitus (T2DM) and rat mesangial cells (MCs) induced by high glucose. T2DM rats were administered at a dose of 10 mg/kg SIT. The kidney index, 24 h urinary protein, blood urea nitrogen (BUN), serum creatinine (Cr), accumulation of glycogen and collagens were investigated by different methods. MCs were administered with SIT at doses of 0.1, 1 and 10 µmol/ml. The possible mechanism of SIT on protection of diabetic kidney injury was examined by expression of transforming growth factor-β1 (TGF-β1)/Smad pathway. The results showed that the SIT-treated diabetic rats significantly reduced diabetic kidney injury by inhibiting the kidney index and attenuating 24 h urinary protein, reducing BUN and serum creatinine, inhibiting progressive renal fibrosis and increassing extracellular matrix including collagen IV and fibronectin. Further studies showed that inhibition of renal fibrosis in SIT-treated diabetic rats and MCs were associated with rebalancing of TGF-β1/Smad pathway. Sitagliptin may be a potent agent for preventing the progression of DN through inhabiting TGF-β1/Smad-mediated renal fibrosis.