Diabetic nephropathy is now the commonest cause of end stage renal disease and accounts for 30-40% of all patients requiring renal replacement therapy. Furthermore, the incidence of diabetic nephropathy continues to increase, in part due to the improved survival of type 2 diabetic patients as the cardiovascular mortality in this group declines (Ritz and Stefanski, 1996). Clinically incipient nephropathy is first manifest by the onset of persistent microalbuminuria, after which, overt diabetic nephropathy is heralded by the appearance of persistent proteinuria. Subsequently, there is a progressive decline in glomerular filtration rate (GFR) resulting, within 5 years, in end stage renal disease in 50% of patients (Hasslacher et al., 1989). The pathology of the renal lesions are similar in type I and II diabetes (Taft et al., 1994), although it has been suggested that there is more heterogeneity in type II diabetes (Chihara et al., 1986). Studies analysing structural-functional relationships have demonstrated that the development of proteinuria correlates with the degree of mesangial expansion (Mauer et al., 1984; White and Bilous, 2000). Although diabetic nephropathy was traditionally considered a primarily glomerular disease, it is now widely accepted that the rate of deterioration of function correlates best with the degree of renal tubulointerstitial fibrosis (Mauer et al., 1984, Bohle et al., 1991). This suggests that although in the majority of patients the primary event is a condition manifest by glomerular changes resulting in proteinuria, the long-term outcome is determined by events in the renal interstitium. With the increasing awareness of the importance of these pathological interstitial changes, interest has focused on the role of cells, such as the epithelial cells of the proximal tubule (PTC) or the interstitial myofibroblast, in the initiation of fibrosis. The aim of the present review is to analyse the available data supporting the role for the PTC in orchestrating renal interstitial fibrosis in diabetic nephropathy as a result of glucose-dependent alterations in PTC function. The potential for subsequent effects on PTC-fibroblast cross-talk will also be considered.