Tetrahydrocurcumin (THC), a principal metabolite of curcumin, was tested in a rat model of type 2 diabetes mellitus. THC was administered via daily oral gavage with the lipid carrier polyenylphosphatidylcholine (PPC) as add‐on therapy to losartan (angiotensin receptor blocker) to examine effects on kidney oxidative stress and fibrosis. A combination of unilateral nephrectomy, high‐fat diet and low‐dose streptozotocin was used to induce diabetic nephropathy in male Sprague–Dawley rats. Animals with fasting blood glucose >200 mg/dL were randomized to PPC, losartan, THC + PPC or THC + PPC + losartan. Untreated chronic kidney disease (CKD) animals had proteinuria, decreased creatinine clearance, and evidence of kidney fibrosis on histology. THC + PPC + losartan treatment significantly lowered blood pressure concurrent with increased messenger RNA levels of antioxidant copper‐zinc‐superoxide dismutase and decreased protein kinase C‐α, kidney injury molecule‐1 and type I collagen in the kidneys; there was decreased albuminuria and a trend for increased creatinine clearance compared to untreated CKD rats. There was decreased fibrosis on kidney histology in PPC‐only and THC‐treated CKD rats. Plasma levels of kidney injury molecule‐1 were decreased in THC + PPC + losartan animals. In summary, add‐on THC to losartan therapy improved antioxidant levels and decreased fibrosis in the kidneys, and lowered blood pressure in diabetic CKD rats.