Objective. QiDan DiHuang decoction (QDD) has been proven to have good efficacy in decreasing albuminuria levels, improving renal function, and inhibiting renal fibrosis in diabetic nephropathy (DN). However, the potential mechanism remains unclear. The purpose of this study was to explore the underlying mechanism of QDD for treating DN in vitro and in vivo. Methods. Db/db mice were treated with QDD or saline intragastrically for 12 weeks. Non-diabetic db/m mice were used as controls. Rat renal tubular epithelial cells (NRK-52E) were cultured in high glucose conditions. ATF4 siRNA was transfected into NRK-52E cells. Different indicators were detected via UPLC, RT-PCR, western blotting, cell viability assays and apoptosis, transmission electron microscopy, histology, and immunofluorescence staining. Results. Db/db mice experienced severe kidney damage and fibrosis, increased levels of PERK, eIF2α, and ATF4, and suppression of renal autophagy compared with db/m mice. The results showed a significant improvement in glucose intolerance, blood urea nitrogen, urine albumin, serum creatinine, and renal fibrosis in db/db mice with QDD treatment. Meanwhile, the application of QDD resulted in the downregulation of PERK, eIF2α, and ATF4 and the upregulation of autophagy in diabetic kidneys. In vitro, the exposure of NRK-52E cells to high glucose resulted in downregulation of the ratio of LC3-II/LC3-I and upregulation of P62, a reduction in the number of autophagosomes and upregulation of fibronectin (FN), collagen IV and TGF-β1 protein, which was reversed by QDD treatment through inhibiting ATF4 expression. Conclusions. Taken together, our results suggest that QDD effectively alleviates diabetic renal injuries and fibrosis by inhibiting the PERK-eIF2α-ATF4 pathway and promoting autophagy in diabetic nephropathy.