Background/Aims: Transforming growth factor β1 (TGF-β1) is a key mediator in diabeticnephropathy (DN). Decorin, a natural inhibitor of TGF-β1, may have healing properties. We investigated whether overexpression of decorin in the kidneys of streptozocin (STZ)-induced diabetic rats improved pathogenic and clinical changes of DN. Methods: Forty-eight Sprague-Dawley rats were evenly divided into 4 groups: STZ-induced diabetic rats (diabetic-control), decorin adenovirus vector (Ad)-treated STZ rats (Ad-decorin), and Ad-lacZ-treated STZ rats (Ad-lacZ), and vehicle control (PBS-control). At 10, 12, and 16 weeks after STZ treatment, we measured urinary albumin excretion (UAE), and immunolabeled type IV collagen in histological samples of rat kidney. We also measured kidney decorin and TGF-β1 levels by reverse transcription polymerase chain reaction and Western blot. Phosphorylated Smad2,3 (p-Smad2,3) was also measured by Western blot. Results: Decorin gene transfection mediated by a recombinant adenovirus has antirenal fibrosis and anti-albuminuria effects in STZ-induced diabetic rats. TGF-β1 mRNA and protein expression in diabetic kidney were reduced 2 weeks after Ad-decorin injection. Conclusion: The renal protective effect of decorin in diabetic rats is at least partly due to the downregulation of the TGF-β1/Smad signaling pathway. Ad-decorin shows potential as a therapeutic for human DN.