Progression of diabetic nephropathy (DN) is manifested by gradual scarring of both the renal glomerulus and tubulointerstitial region. Over the past several years, the general understanding of the pathogenic factors that lead to renal fibrosis in DN has expanded considerably. In this review, some of the important factors that appear to be involved in driving this fibrosing process are discussed, with special emphasis on newer findings and insights. It is now clear that multiple cell types in the kidney contribute to progressive fibrosis in DN. New concepts about bradykinin, TGF-β and eNOS signaling as well as JAK/STAT activation and the central role of inflammation in both glomerular and tubulointerstitial fibrosis are discussed.