In order to explore the effects of Panax notoginoside (PNS) on the expression of transforming growth factor beta 1 (TGF-beta 1) and Smad-7 in renal tissues of diabetes, a rat model of diabetic nephropathy was set up by intravenous injection of streptozotocin (STZ). Wistar rats were randomly divided into normal group, diabetic control group, group treated by PNS at low-dosage (PL), group treated by PNS at high-dosage (PH) and group treated by catopril (C), respectively. Fasting blood glucose (FBG), renal index, endogenous creatinine clearance rate (C-Cr) and urinary albumin (UAlb) in 24 h were examined after 6 weeks. Meanwhile, the expressions of TGF-beta 1 and Smad7 in renal tissues were immunohistochemically dectected. At the end of the sixth week, FBG, renal index, C-cr, UAlb were all elevated significantly in control group (P<0.01). The expression of TGF-beta 1 protein was increased while Smad7 protein decreased in renal tissue (P<0.01). However, the treatment with PNS reversed the aforementioned changes in renal tissues of diabetic rats. These results indicate that PNS possess a protective effect on the kidney of diabetic rats and it might protect kidney by inhibiting the expression of TGF-beta 1 protein and enhancing the expression of Smad7 protein.