Diabetic nephropathy (DN) is a leading cause of end-stage renal disease. Chronic inflammation is recognized as a key causal factor in the development and progression of DN, and the imbalance of M1/M2 macrophages (Mφ) contributes to this process. Mesenchymal stem cells (MSCs) have been reported to prevent renal injuries via immune regulation in diabetic models, but whether these benefits are owing to the regulation of Mφ, and the underlying signaling pathways are unknown. Here, we showed that MSCs elicited Mφ into M2 phenotype and prevented renal injuries in DN mice, but these effects were abolished when the Mφ were depleted by clodronate liposomes (Lipo-Clod), suggesting that Mφ were necessary for renal protection of MSCs in DN mice. Moreover, the MSCs promoted M2 polarization was attributable to the activation of transcription factor EB (TFEB) and subsequent restore of lysosomal function and autophagy activity in Mφ. Furthermore, in vivo adoptive transfer of Mφ in vivo (Mφ from DN + MSCs mice) or Mφ MSCs (Mφ cocultured with MSCs in vitro) to DN mice improved renal function. While, TFEB knockdown in Mφ significantly abolished the protective role of Mφ MSCs . Altogether, these findings revealed that MSCs suppress inflammatory response and alleviate renal injuries in DN mice via TFEB-dependent Mφ switch. K E Y W O R D S diabetic nephropathy, lysosome-autophagy, macrophages polarization, mesenchymal stem cells, TFEB