Diabetic nephropathy (DN) is one of the common microvascular complications of diabetes mellitus. Renal fibrosis is closely related to the deterioration of renal function. The present study aimed to investigate protective effect of Taxus chinensis on high-fat diet/streptozotocin-induced DN in rats and explore the underlying mechanism of action. The rat DN model was established via feeding high fat diet for 4 weeks and subsequently injecting streptozotocin (30 mg·kg −1 body weight) intraperitoneally. The rats with blood glucose levels higher than 16.8 mmol·L −1 were selected for experiments. The DN rats were treated with Taxus chinensis orally (0.32, 0.64, and 1.28 g·kg −1) once a day for 8 weeks. Taxus chinensis significantly improved the renal damage, which was indicated by the decreases in 24-h urinary albumin excretion rate, blood serum creatinine, and blood urea nitrogen. Histopathological examination confirmed the protective effect of Taxus chinensis. The thickness of glomerular basement membrane was reduced, and proliferation of mesangial cells and podocytes cells and increase in mesangial matrix were attenuated. Further experiments showed that Taxus chinensis treatment down-regulated the expression of TGF- β1 and α-SMA, inhibited phosphorylation of Smad2 and Smad3. These results demonstrated that Taxus chinensis alleviated renal injuries in DN rats, which may be associated with suppressing TGF- β1/Smad signaling pathway.