Diabetic nephropathy (DN) is a microvascular complication associated with diabetes causing slow deterioration of kidneys leading to end-stage renal disease. Timely intervention and diagnosis are crucial in order to ameliorate and halt the progression of DN. Current diagnosis of DN consists of urine assays for detection of microalbuminuria, which have inadequate specificity and sensitivity. Hence, there arises a need to discover stage-specific biomarkers which can aid in the early detection of DN and also in identifying the mechanisms underlying pathogenesis of DN. Therefore the present study was undertaken to identify the differentially expressed proteins in the urine and to examine the pattern of proteomic changes occurring in the rat kidneys during the course of progression of streptozotocin-induced model of DN in rats. Two-dimensional gel electrophoresis coupled to MALDI-TOF mass spectrometry was employed to identify the differentially expressed proteins under diabetic conditions. Among the identified proteins Calgranulin A and Calgranulin B appeared in the urinary proteome at the fourth week of induction of diabetes while we recorded a time-dependent decrease in the expression of major urinary protein (alpha 2u globulin) in the urine as well as kidneys of diabetic rats. Parallel monitoring of targeted proteomic changes in the renal proteome revealed an increase in histone H2B phosphorylation at serine14 along with a gradual decrease in Bcl-2 and MMP-13 expression during the course of progression and development of streptozotocin-induced DN.