Diabetic nephropathy remains a major cause of morbidity and mortality in the diabetic population and is the leading cause of end-stage renal failure in the Western World. Despite current therapeutics including intensified glycemic control and blood pressure lowering agents, renal disease continues to progress relentlessly in diabetic patients, albeit at a lower rate. It is well recognized that metabolic and hemodynamic factors play a central role in accelerating renal disease in diabetes. However, recent experimental studies have suggested that increased generation of reactive oxygen species (ROS) as a result of the diabetic milieu may play a central role in the progression of diabetic microvascular complications. These ROS appear to be generated primarily from mitochondrial sources and via the enzyme, NADPH oxidase. This review focuses on how ROS play a deleterious role in the diabetic kidney and how they are involved in crosstalk among various signaling pathways, ultimately leading to renal dysfunction and structural injury.