Background:-Stem cell therapy holds a great promise for the repair of injured tissues and organs, including the kidney.The aim of the present study was to study the effect of human adipose derived mesenchymal stem cells (HADMSCs) on experimental diabetic nephropathy (DN) in a rat model. Materials and methods:-Rats were divided into controls, DN group, early stage DN rats receiving HADMSCs and late stages DN rats received HADMSCs. The HADMSCs were injected once in rat tail vein as a single dose of 1X10 6 cells in 1 ml PBS. At the end of the experiment, each group was subjected to 24 hour urine collection for urinary albumin,urinary N-acetyl B-D glucosaminidase (NAG),creatinine clearance measurements and blood sampling through retro-orbital vein for blood glucose, serum urea, and serum creatinine estimation. This was followed by scarification of all groups to obtain the kidneys for histopathological examination and DNA extraction. Results:-HADMSCs therapy significantly improved 24 hour urine collection for urinary albumin, urinary NAG, blood glucose,serum ureaand serum creatinine levels in HADMSCs recipient rats when compared to DN group. Histopathological examination showed minimal degeneration in renal tubules and normal tufts of glomeruli after injection of HADMSCs in DN rats. Interestingly, treated rats at early DN stages showed better results than treated rats at late DN stages. Lastly, the HADMSCs were engrafted into the rat renal tissue. Conclusion:-The current study suggests that intravenous injection of HADMSCs into rats with DN improved renal function and regenerating kidney tissues. HADMSCs accomplish this function by decreasing blood glucose levels or by direct effect due to their homing into the affected kidney.Furthermore, treated rats at early DN stages showed better results than treated rats at late DN stages.