Altered growth of renal cells is one of the early abnormalities detected after the onset of diabetes. Cell culture studies whereby renal cells are exposed to high glucose concentrations have provided a considerable amount of insight into mechanisms of growth. In the glomerular compartment, there is a very early and self-limited proliferation of mesangial cells with subsequent hypertrophy, whereas proximal tubular cells primarily undergo hypertrophy. There is overwhelming evidence from in vivo and cell culture studies that induction of the transforming growth factor-beta (TGF-beta) system mediates the actions of high ambient glucose and that this system is pivotal for the hypertrophy of mesangial and tubular cells. Other factors such as hemodynamic forces, protein glycation products, and several mediators (for example, angiotensin II, endothelin-1, thromboxane, and platelet-derived growth factor) may further amplify the synthesis of TGF-beta and/or the expression of its receptors in the diabetic state. Cellular hypertrophy can be characterized by cell cycle arrest in the G1 phase. The molecular mechanism arresting mesangial cells in the G1 phase of the cell cycle is the induction of cyclin-dependent kinase (CdK) inhibitors such as p27Kip1 and p21, which bind to and inactivate cyclin-CdK complexes responsible for G1-phase exit. High-glucose-induced activation of protein kinase C and stimulated TGF-beta expression appear to be essential for stimulated expression of p27Kip1. In addition, a decreased turnover of protein caused by the inhibition of proteases contributes to hypertrophy. The development of irreversible renal changes in diabetes mellitus such as glomerulosclerosis and tubulointerstitial fibrosis is always preceded by the early hypertrophic processes in the glomerular and the tubular compartments. It may still be debated whether diabetic renal hypertrophy will inevitably lead to irreversible fibrotic changes in the absence of other factors such as altered intraglomerular hemodynamics and genetic predisposition. Nevertheless, understanding cellular growth on a molecular level may help design a novel therapeutic approach to prevent or treat diabetic nephropathy effectively.