Background: Leflunomide (LEF) and benazepril have renoprotective effects on diabetic nephropathy (DN) through their anti-inflammatory and anti-fibrotic activities. This study investigated whether combined treatment using LEF and benazepril affords superior protection compared with the respective monotherapies. Methods: Diabetes was induced with streptozotocin (STZ, 65 mg/kg) by intraperitoneal injection in male Wistar rats. Two weeks after STZ injection, diabetic rats were treated daily for 12 weeks with LEF (10 mg/kg), benazepril (10 mg/kg), or a combination of both. Basic parameters (body weight, fasting blood glucose level, and 24 h urinary protein excretion), histopathology, inflammatory [inflammatory cell infiltration (ED-1), monocyte chemoattractant protein-1 (MCP-1), and Toll-like receptor-2 (TLR-2)] and glomerulosclerotic factors [transforming growth factor-β1 (TGF-β1) and connective tissue growth factor (CTGF)], and oxidative stress (8-hydroxy-2'-deoxyguanosine, 8-OHdG) were studied. Results: Benazepril or LEF treatment significantly prevented body weight loss and 24 h urinary protein excretion induced by diabetes; combined treatment with LEF and benazepril further improved these parameters compared with giving each drug alone (all p < 0.01). Increased expression of inflammatory (MCP-1 and TLR-2) and glomerulosclerotic (TGF-β1 and CTGF) factors in diabetic rat kidney was reduced by treatment with either LEF or benazepril and was further reduced by the combined administration of the two drugs (p < 0.01). These effects were accompanied by suppression of urinary 8-OHdG excretion. There was no significant between-group difference in blood glucose level. Conclusions: LEF treatment lessens DN, and combined treatment with LEF and benazepril provides synergistic effects in preventing DN.