The overexpression of vascular endothelial growth factor (VEGF) is known to be involved in the pathogenesis of diabetic nephropathy. In this study, the protective effects of taurine on diabetic nephropathy along with its underlying mechanism were investigated. Experimental animals were divided into three groups: LETO rats as normal group (n=10), OLETF rats as diabetic control group (n=10), and OLETF rats treated with taurine group (n=10). We treated taurine (200 mg/kg/day) for 20 weeks and treated high glucose (HG, 30 mM) with or without taurine (30 mM) in mouse cultured podocyte. After taurine treatment, blood glucose level was decreased and insulin secretion was increased. Taurine significantly reduced albuminuria and ACR. Also it decreased glomerular volume, GBM thickness and increased open slit pore density through decreased VEGF and increased nephrin mRNA expressions in renal cortex. The antioxidant effects of taurine were confirmed by the reduction of urine MDA in taurine treated diabetic group. Also reactive oxygen species (ROS) levels were decreased in HG condition with taurine treated podocytes compared to without taurine. These results indicate that taurine lowers glucose level via increased insulin secretion and ameliorates the progression of diabetic nephropathy through antifibrotic and antioxidant effects in type 2 diabetes rat model.