Aims/hypothesis We hypothesised that maternal diabetes impairs kidney formation in offspring via augmented expression of hedgehog interacting protein (HHIP). Our gene-array results were performed in neonatal kidneys from our murine model of maternal diabetes and indicated that Hhip expression was significantly modulated by maternal diabetes. Methods We systematically examined the functional role of HHIP in kidney formation in our murine maternal diabetes model and elucidated the potential mechanisms related to dysnephrogenesis in vitro. Results The kidneys of the offspring of diabetic dams, compared with those of the offspring of control non-diabetic dams, showed retardation of development-small kidneys and less ureteric bud (UB) branching morphogenesis. Augmented HHIP expression was observed in the offspring of diabetic dams, initially localised to differentiated metanephric mesenchyme and UB epithelium and subsequently in maturing glomerular endothelial and tubulointerstitial cells. The heightened HHIP targeting TGF-β1 signalling was associated with dysmorphogenesis. In vitro, HHIP overexpression decreased sonic hedgehog and paired box gene 2 proteins (SHH and PAX2, respectively) and increased transcriptional nuclear factor-kappa B (NFκB, p50/p65), phosphorylation of p53, and TGF-β1 expression. In contrast, overexpression of PAX2 inhibited HHIP and NFκB and activated SHH, N-myc and p27Kip1 expression. Moreover, high glucose stimulated HHIP expression, and then targeted TGF-β1 signalling. Thus, PAX2, via a negative autocrine feedback mechanism, attenuated the stimulatory effect of high glucose on HHIP expression. Conclusions/interpretation Maternal diabetes modulates kidney formation in young progeny mediated, at least in part, via augmented HHIP expression.