It is likely that the pathophysiology of diabetic nephropathy involves an interaction of metabolic and haemodynamic factors. Relevant metabolic factors include glucose-dependent pathways such as advanced glycation, increased formation of polyols, and activation of the enzyme, protein kinase C. Specific inhibitors of the various pathways are now available, enabling investigation of the role of these processes in the pathogenesis of diabetic nephropathy and potentially to provide new therapeutic approaches for the prevention and treatment of diabetic nephropathy. Haemodynamic factors to consider include systemic hypertension, intraglomerular hypertension, and the role of vasoactive hormones, such as angiotensin II. The mainstay of therapy remains attaining optimum glycaemic control. Antihypertensive therapy has a major role in slowing the progression of diabetic nephropathy. Agents that interrupt the renin-angiotensin system such as angiotensin-converting enzyme inhibitors and angiotensin II receptor antagonists may be particularly useful as renoprotective agents in both the hypertensive and normotensive context.