The past two decades have yielded major advances in our understanding of the pathogenetic mechanisms that cause diabetic nephropathy. Of particular interest is the emerging paradigm of the recapitulation of developmental programmes within the diabetic kidney. Recently we have used the complementary techniques of suppression subtractive hybridization and Affymetrix GeneChips to assess changes in gene expression in human mesangial cells subjected to high ambient glucose concentrations and cyclic mechanical strain in vitro, the latter being models of hyperglycaemia and glomerular hypertension, respectively. In this review, we will focus on the potential role of one such differentially expressed gene, namely gremlin, in the pathogenesis of diabetic nephropathy. In the context of developmental nephrology, gremlin warrants special mention. Gremlin is a 184 amino acid protein and a member of the cysteine knot superfamily. The protein is highly conserved during evolution and is present in soluble and cell-associated forms. It belongs to a novel family of bone morphogenetic protein (BMP) antagonists that includes the head-inducing factor Cerberus and the tumour suppressor DAN. These proteins play important roles in limb development and neural crest cell differentiation. Evidence will be presented that mesangial cell gremlin expression is up-regulated by high ambient glucose, cyclic mechanical strain and transforming growth factor-beta (TGF-beta) and that gremlin may be an important modulator of mesangial cell proliferation and epithelial-mesenchymal transdifferentiation in a diabetic milieu.