Introduction: Diabetic nephropathy (DN) is the leading cause of chronic kidney failure, however the mechanisms underlying the characteristic expansion of the extracellular matrix (ECM) in diabetic kidneys remain controversial and unclear. In non-diabetic kidney scarring the protein crosslinking enzyme tissue transglutaminase (tTg) has been implicated in this process by the formation of increased Ε-(γ-glutamyl)lysine bonds between ECM components in both experimental and human disease. Studies in db<sup>+</sup>/db<sup>+</sup> diabetic mice and in streptozotocin-treated rats have suggested a similar mechanism, although the relevance of this to human disease has not been addressed. Methods: We have undertaken a retrospective analysis of renal biopsies from 16 DN patients with type 2 diabetes mellitus using an immunohistochemical and immunofluorescence approach, with tTg and Ε-(γ-glutamyl)lysine crosslink quantified by confocal microscopy. Results: Immunofluorescent analysis of human biopsies (confocal microscopy) showed increases in levels of tTg (+1,266%, p < 0.001) and Ε-(γ-glutamyl)lysine (+486%, p < 0.001) in kidneys with DN compared to normal. Changes were predominantly in the extracellular periglomerular and peritubular areas. tTg staining correlated with Ε-(γ-glutamyl)lysine (r = 0.615, p < 0.01) and renal scarring (Masson’s trichrome, r = 0.728, p < 0.001). Significant changes in Ε-(γ-glutamyl)lysine were also noted intracellularly in some (≤5%) tubular epithelial cells. This is consistent with cells undergoing a novel transglutaminase-mediated cell death process in response to Ca<sup>2+</sup> influx and subsequent activation of intracellular tTg. Conclusion: Changes in tTg and Ε-(γ-glutamyl)lysine occur in human DN. Cellular export of tTg may therefore be a factor in the perpetuation of DN by crosslinking and stabilisation of the ECM, while intracellular activation may lead to cell death contributing towards tubular atrophy.