Aims/hypothesis Liver X receptors (LXRs) α and β are nuclear hormone receptors that are widely expressed in the kidney. They promote cholesterol efflux from cells and inhibit inflammatory responses by regulating gene transcription. Here, we hypothesised (1) that LXR deficiency would promote renal decline in a mouse model of diabetes by accelerating intraglomerular cholesterol accumulation and, conversely, (2) that LXR agonism would attenuate renal decline in diabetes.Methods Diabetes was induced with streptozotocin (STZ) and maintained for 14 weeks in Lxrα/β +/+ (Lxrα, also known as Nr1h3; Lxrβ, also known as Nr1h2) and Lxrα/β −/− mice. In addition, STZ-injected DBA/2J mice were treated with vehicle or the LXR agonist N ,N -dimethyl-hydroxycholenamide (DMHCA) (80 mg/kg daily) for 10 weeks. To determine the role of cholesterol in diabetic nephropathy (DN), mice were placed on a Western diet after hyperglycaemia developed. Results Even in the absence of diabetes, Lxrα/β −/− mice exhibited a tenfold increase in the albumin:creatinine ratio and a 40-fold increase in glomerular lipid accumulation compared with Lxrα/β +/+ mice. When challenged with diabetes, Lxrα/β −/− mice showed accelerated mesangial matrix expansion and glomerular lipid accumulation, with upregulation of inflammatory and oxidative stress markers. In the DN-sensitive STZ DBA/2J mouse model, DMHCA treatment significantly decreased albumin and nephrin excretion (by 50% each), glomerular lipids and plasma triacylglycerol (by 70%) and cholesterol (by 48%); it also decreased kidney inflammatory and oxidative stress markers compared with vehicle-treated mice. Conclusions/interpretation These data support the idea that LXR plays an important role in the normal and diabetic kidney, while showing that LXR, through its inhibitory effect on inflammation and cholesterol accumulation in glomeruli, could also be a novel therapeutic target for DN.