Specific therapies of diabetic nephropathy (DN) are not available, and current treatment strategies are limited to management of blood glucose levels and control of hypertension. The re-activation of developmental programs in DN suggests new potential therapeutic targets. Bone morphogenetic protein-7 (BMP-7) and its antagonist, Gremlin is revealed to be involved in renal development and diabetic nephropathy. This article reviews the changes of BMP-7 and Gremlin in diabetic kidney, the protective effects on diabetic nephropathy when targeting BMP-7 and Gremlin, and the possible mechanism. The reorganization of the re-activation of Gremlin and BMP-7 in diabetic kidney had shed light on the identification of novel therapeutic targets for DN.