Diabetic nephropathy is characterised by increased glomerular permeability to proteins, thickening of the glomerular basement membrane, and excessive extracellular matrix accumulation in the mesangium. Both mesangial cells and podocytes play a pivotal role in the pathogenesis of these alterations. Recent studies have cast light on both the mediators and the intracellular signalling molecules whereby high glucose and stretch, mimicking glomerular capillary hypertension, induce an abnormal extracellular matrix deposition. Furthermore, they have provided a better understanding of the mechanisms by which multiple pathways of hyperglycaemia- and hypertension-induced damage may converge at the cellular level. Glomerulosclerosis only partially explains the development of proteinuria and in recent years there has been a growing interest on the potential role of podocytes. The discovery of nephrin, a key molecule of the slit-diaphragm, has stressed the importance of podocytes in maintaining the glomerular size-selective barrier. Nephrin is lost in both human and experimental diabetic nephropathy and studies on cultured podocytes have shown that insults relevant to diabetes, such as high glucose, AGE, angiotensin II, and stretch, have important deleterious effects on podocyte survival and adhesion. This review focuses on the most significant advances in understanding the pathophysiology of both mesangial cells and podocytes, and their potential impact on diabetic nephropathy future treatments.