Diabetic nephropathy seems to occur as a result of an interaction of metabolic and haemodynamic factors. Glucose dependent pathways are activated within the diabetic kidney. These include increased oxidative stress, renal polyol formation and accumulation of advanced glycated end-products. Haemodynamic factors are also implicated in the pathogenesis of diabetic nephropathy and include increased systemic and intraglomerular pressure and activation of various vasoactive hormone pathways including the renin-angiotensin system and endothelin. These haemodynamic pathways, independently and with metabolic pathways, activate intracellular second messengers such as protein kinase C and MAP kinase, nuclear transcription factors such as NF-kappaB and various growth factors such as the prosclerotic cytokine, TGF-beta and the angiogenic, permeability enhancing growth factor, VEGF. These pathways ultimately lead to increased renal albumin permeability and extracellular matrix accumulation which results in increasing proteinuria, glomerulosclerosis and tubulointerstitial fibrosis. Therapeutic strategies involved in the management and prevention of diabetic nephropathy include currently available treatments such as intensified glycaemic control and antihypertensive agents, particularly those which interrupt the renin-angiotensin system. More novel strategies to influence vasoactive hormone action or to inhibit various metabolic pathways such as inhibitors of advanced glycation, specific protein kinase C isoforms and aldose reductase are at present under experimental and clinical investigation. It is predicted that multiple therapies will be required to reduce the progression of diabetic nephropathy.