NaoXinTong Capsule (NXT), a Chinese medicine, is currently used to treat patients with cardiovascular and cerebrovascular diseases. Clinical observations indicate its anti-diabetic functions with unclear mechanisms. Herein, we report the effect of NXT on diabetic nephropathy (DN). Type 2 diabetic db/db mice were treated with NXT for 14 weeks. In the course of treatment, NXT reduced diabetes-increased glucose levels and improved renal functions. At the end of treatment, we found that NXT ameliorated serum lipid profiles and other biochemical parameters. In the kidney, NXT inhibited mesangial matrix expansion, expression of vascular endothelial growth factor A, fibronectin, advanced glycation end product and its receptor. Meanwhile, it reduced the diabetes-induced podocyte injury by increasing WT1 and nephrin expression. In addition, NXT inhibited accumulation of extracellular matrix proteins by increasing MMP2/9 expression through inactivation of TGFβ/Smad pathway and CTGF expression. Mechanically, NXT activated insulin signaling pathway by increasing expression of INSR, IRS and FGF21, phosphorylation of Akt and AMPKα in the liver, INSR phosphorylation in the kidney, and FGF21 and GLUT4 expression in adipose tissue and skeletal muscle. Taken together, our study demonstrates that NXT inhibits DN by ameliorating glucose/lipid metabolism, maintaining tissue structure integrity, and correcting diabetes-induced renal dysfunctions.