Excessive deposition of extracellular matrix (ECM) in the kidney is the hallmark of diabetic nephropathy. Although the amount of ECM deposited in the kidney depends on the balance between the synthesis and degradation of ECM, the role of ECM degradation in matrix remodeling has been less well appreciated. High glucose, advanced glycation end products, angiotensin II, and TGF-beta1 all increase intracellular reactive oxygen species (ROS) in renal cells and contribute to the development and progression of diabetic renal injury. The role of ROS in increased ECM synthesis has been well documented. ROS may also play a critical role in decreased ECM degradation by mediating high glucose- and TGF-beta1-induced inhibition of the proteolytic system, plasmin, and matrix metalloproteinases in the glomeruli. A recent observation suggests that ROS play an important role in tubulointerstitial fibrosis by mediating TGF-beta1-induced epithelial-mesenchymal transition (EMT). Accelerated ECM degradation is required to disrupt tubular basement membrane and complete EMT. ROS thus seem to be involved in both decreased and increased ECM degradation. It is not clear how cells determine when and where to increase or decrease ECM degradation in response to ROS. Precise definition of ROS-activated signaling pathways leading to ECM remodeling in the kidney will provide new strategies to prevent or treat diabetic renal injury.