Saturated fatty acid (SFA)-related lipotoxicity is a pathogenesis of diabetes-related renal proximal tubular epithelial cell (PTEC) damage, closely associated with a progressive decline in renal function. This study was designed to identify a free fatty acid (FFA) metabolism-related enzyme that can protect PTECs from SFA-related lipotoxicity. Among several enzymes involved in FFA metabolism, we identified stearoyl-CoA desaturase-1 (SCD1), whose expression level significantly decreased in the kidneys of high-fat diet (HFD)-induced diabetic mice, compared with non-diabetic mice. SCD1 is an enzyme that desaturates SFAs, converting them to monounsaturated fatty acids (MUFAs), leading to the formation of neutral lipid droplets. In culture, retrovirus-mediated overexpression of SCD1 or MUFA treatment significantly ameliorated SFA-induced apoptosis in PTECs by enhancing intracellular lipid droplet formation. In contrast, siRNA against SCD1 exacerbated the apoptosis. Both overexpression of SCD1 and MUFA treatment reduced SFA-induced apoptosis via reducing endoplasmic reticulum stress in cultured PTECs. Thus, HFD-induced decrease in renal SCD1 expression may play a pathogenic role in lipotoxicity-induced renal injury, and enhancing SCD1-mediated desaturation of SFA and subsequent formation of neutral lipid droplets may become a promising therapeutic target to reduce SFA-induced lipotoxicity. The present study provides a novel insight into lipotoxicity in the pathogenesis of diabetic nephropathy.