The present study investigated the role of stromal cell-derived factor-1 in the progression of renal injury in type 2 diabetic nephropathy. The 8-week old male db/db mice were used as the model of diabetic nephropathy and aged-matched male C57BL/6 mice constituted the control group. Fasting blood glucose, 24 hour urinary albumin and the creatinine clearance rate were measured. The expressions of stromal cell-derived factor-1, CXC chemokine receptor 4 and F4/80 were detected. Normal rat kidney epithelial cells were exposed to stromal cell-derived factor-1 alpha, high glucose, tumour growth factor-beta 1, valsartan and LY294002, respectively. The extracellular matrix expression was evaluated. It was found that creatinine clearance rate was significantly decreased in 28-week db/db mice compared to the age-matched C57BL/6 mice and valsartan could significantly increase creatinine clearance rate. The expression of stromal cell-derived factor-1, CXC chemokine receptor 4 and F4/80 was significantly increased in the kidney of db/db mice but not in C57BL/6 mice, which was improved with valsartan treatment. In vitro, the expression of CXC chemokine receptor 4 was detected in the rat kidney epithelial cells. Tumour growth factor-beta 1 increased the expressions of type IV collagen and fibronectin in rat kidney epithelial cells under low glucose and high glucose condition. Stromal cell-derived factor-1 alpha inhibited the harmful effect of tumour growth factor-beta 1 on extracellular matrix expression, and valsartan exerted synergistic effect on stromal cell-derived factor-1 alpha. Stromal cell-derived factor-1 alpha decreased tumour growth factor-beta 1 expression and increased p-AKT expression, which were inhibited by LY294002 treatment. Stromal cell-derived factor-1 improved renal fibrosis which might partly involve TGF beta-mediated extracellular matrix via PI3K/AKT pathway.