Diabetic nephropathy (DN), a severe microvascular complication of diabetes, is one of the leading causes of end-stage renal disease. Huayu Tongluo Recipe (HTR) has been widely used in the clinical treatment of DN in China, and its efficacy is reliable. This study aimed to explore the renoprotective effect of HTR and the underlying mechanism. Male Sprague-Dawley rats were fed with high sugar and fat diet combined with an intraperitoneal injection of STZ to establish the diabetic model. Rats in each group were respectively given drinking water, HTR, and irbesartan by gavage for 16 weeks. 24-hour urine samples were collected every 4 weeks to detect the content of total protein and 8-OHdG. Blood samples were taken to detect biochemical indicators and inflammatory markers at the end of 16th week. Renal tissue was collected to investigate pathological changes and to detect oxidative stress and inflammatory markers. AMPK/Nrf2 signaling pathway and fibrosis-related proteins were detected by immunohistochemistry, immunofluorescence, real-time PCR, and western blot. 24h urine total protein (24h UTP), serum creatinine (Scr), blood urea nitrogen (BUN), total cholesterol (TC), and triglyceride (TG) were decreased in the rats treated with HTR, while there was no noticeable change of blood glucose. HTR administration decreased malondialdehyde (MDA) content and increased superoxide dismutase (SOD) activity in kidneys, complying with reduced 8-OHdG in the urine. The levels of TNF-α, IL-1β, and MCP1 and the expression of nuclear NFκB were also lower after HTR treatment. Furthermore, HTR alleviated pathological renal injury and reduced the accumulation of extracellular matrix (ECM). Besides, HTR enhanced the AMPK/Nrf2 signaling and increased the expression of HO-1 while it inhibited the Nox4/TGF-β1 signaling in the kidneys of STZ-induced diabetic rats. HTR can inhibit renal oxidative stress and inflammation to reduce ECM accumulation and protect the kidney through activating the AMPK/Nrf2 signaling pathway in DN.