The pivotal role of endothelial nitric oxide synthase (eNOS) in diabetic nephropathy (DN) has been demonstrated using global eNOS knockout (eNOSGKO) mice. However, the precise role of endothelially expressed eNOS and how its deficiency advances DN are still unclear. Here, we targeted endothelial eNOS expression (E-eNOSKO) after the onset of diabetes using the floxed eNOS and endSCL-CreER alleles. Diabetes was induced by low-dose streptozotocin injections. To evaluate the role of nuclear factor of activated T cells-2 (NFAT2) in podocyte injury in this condition, podocyte-specific NFAT2KO mice were also generated on eNOSGKO mice. The mechanisms of podocyte injury were investigated using cultured podocytes. Compared with diabetic wild-type mice, diabetic E-eNOSKO mice showed more advanced DN accompanied by NFAT2 expression in podocytes. NO donor suppressed NFAT2 expression and activation in high-glucose cultured podocytes as well as in diabetic E-eNOSKO mice. Furthermore, podocyte-specific deletion of NFAT2 attenuated DN in diabetic eNOSGKO mice accompanied by decreased heparanase (HPSE) expression in podocytes. Consistent with this finding, HPSE was upregulated by NFAT2 transfection and suppressed by NFAT2 siRNA or NO donor treatment in cultured podocytes. HPSE transfection reduced podocyte attachment to extracellular matrix concurrent with syndecan-4 (SDC4) shedding, and this effect was attenuated by co-transfection of SDC4. Finally, HPSE inhibitor treatment attenuated podocyte injury in diabetic E-eNOSKO mice with increased SDC4 expression in podocytes. Collectively, our data suggest that endothelial eNOS deficiency causes podocyte HPSE expression in diabetic mice through NFAT2, and HPSE promotes podocyte detachment in part through SDC4 shedding, advancing DN.