Diabetic renal disease is associated with lipid deposits in the kidney. The purpose of our study was to determine whether there is altered regulation of the sterol regulatory element-binding proteins (SREBPs) in the diabetic kidney and whether SREBPs mediate the abnormal renal lipid metabolism and diabetic renal disease. In streptozotocin-induced diabetes in the rat, there were marked increases in SREBP-1 and fatty acid synthase (FAS) expression, resulting in increased triglyceride (TG) accumulation. Treatment of diabetic rats with insulin prevented the increased renal expression of SREBP-1 and the accumulation of TG. The role of hyperglycemia in the up-regulation of SREBP-1 was confirmed in renal cells cultured in a high glucose media. High glucose induced increased expression of SREBP-1a and -1c mRNA, SREBP-1 protein, and FAS, resulting in increased TG content. To determine a direct role for SREBP in mediating the increase in renal lipids and glomerulosclerosis, we studied SREBP-1a transgenic mice with increased renal expression of SREBP-1. The increase in SREBP-1 was associated with increased expression of FAS and acetyl CoA carboxylase, resulting in increased TG content, increased expression of transforming growth factor beta1 and vascular endothelial growth factor, mesangial expansion, glomerulosclerosis, and proteinuria. Our study therefore indicates that renal SREBP-1 expression is increased in diabetes and that SREBP-1 plays an important role in the increased lipid synthesis, TG accumulation, mesangial expansion, glomerulosclerosis, and proteinuria by increasing the expression of transforming growth factor beta and vascular endothelial growth factor.