Activation of Ras-related C3 botulinum toxin substrate 1 (Rac1) has been implicated in diverse kidney diseases, yet its in vivo significance in diabetic nephropathy (DN) is largely unknown. In the present study, we demonstrated a podocyte-specific Rac1-deficient mouse strain and showed that specific inhibition of Rac1 was able to attenuate diabetic podocyte injury and proteinuria by the blockade of Rac1/PAK1/p38/β-catenin signaling cascade, which reinstated the integrity of podocyte slit diaphragms (SD), rectified the effacement of foot processes (FPs), and prevented the dedifferentiation of podocytes. In vitro, we showed Rac1/PAK1 physically bound to β-catenin and had a direct phosphorylation modification on its C-terminal Ser675, leading to less ubiquitylated β-catenin, namely more stabilized β-catenin, and its nuclear migration under high-glucose conditions; further, p38 activation might be responsible for β-catenin nuclear accumulation via potentiating myocyte-specific enhancer factor 2C (MEF2c) phosphorylation. These findings provided evidence for a potential renoprotective and therapeutic strategy of cell-specific Rac1 deficiency for DN and other proteinuric diseases.