Thiazolidinedione (TZD), a ligand for peroxisome proliferator-activated receptor-gamma (PPAR-gamma), exerts anti-inflammatory effects independently of the insulin-sensitizing effect. In the present study, we tested the hypothesis that TZD prevents the progression of diabetic nephropathy by modulating the inflammatory process. Five-week-old Sprague-Dawley rats were divided into three groups: 1) nondiabetic control rats (non-DM), 2) diabetic rats (DM), and 3) diabetic rats treated with pioglitazone (DM+pio). Diabetes was induced by injection with streptozotocin (STZ). The DM+pio group received 0.0002% pioglitazone mixed in chow for 8 wk after induction of diabetes. Blood glucose and HbA1c were elevated in diabetic rats but did not change by treatment with pioglitazone. Pioglitazone reduced urinary albumin excretion and glomerular hypertrophy, suppressed the expression of transforming growth factor (TGF)-beta, type IV collagen, and ICAM-1, and infiltration of macrophages in the kidneys of diabetic rats. Furthermore, renal NF-kappaB activity was increased in diabetic rats and reduced by pioglitazone. PPAR-gamma was expressed in glomerular endothelial cells in the diabetic kidney and in cultured glomerular endothelial cells. High-glucose conditions increased the expression of ICAM-1 and the activation of NF-kappaB in cultured glomerular endothelial cells. These changes were reduced by pioglitazone, ciglitazone, and pyrrolidine dithiocarbamate, an inhibitor of NF-kappaB. However, pioglitazone did not show the changes in the presence of PPAR-gamma antagonist GW9662. Our results suggest that the preventive effects of pioglitazone may be mediated by its anti-inflammatory actions, including inhibition of NF-kappaB activation, ICAM-1 expression, and macrophage infiltration in the diabetic kidney.