The expression of aldose reductase is tightly regulated by the transcription factor tonicity response element binding protein (TonEBP/NFAT5) binding to three osmotic response elements (OREs; OREA, OREB, and OREC) in the gene. The aim was to investigate the contribution of NFAT5 to the pathogenesis of diabetic nephropathy. Peripheral blood mononuclear cells (PBMCs) were isolated from the following subjects: 44 Caucasoid patients with type 1 diabetes, of whom 26 had nephropathy and 18 had no nephropathy after a diabetes duration of 20 years, and 13 normal healthy control subjects. In addition, human mesangial cells (HMCs) were isolated from the normal lobe of 10 kidneys following radical nephrectomy for renal cell carcinoma. Nuclear and cytoplasmic proteins were extracted from PBMCs and HMCs and cultured in either normal or high-glucose (31 mmol/l D-glucose) conditions for 5 days. NFAT5 binding activity was quantitated using electrophoretic mobility shift assays for each of the OREs. Western blotting was used to measure aldose reductase and sorbitol dehydrogenase protein levels. There were significant fold increases in DNA binding activities of NFAT5 to OREB (2.06 ± 0.03 vs. 1.33 ± 0.18, P = 0.033) and OREC (1.94 ± 0.21 vs. 1.39 ± 0.11, P = 0.024) in PBMCs from patients with diabetic nephropathy compared with diabetic control subjects cultured under high glucose. Aldose reductase and sorbitol dehydrogenase protein levels in the patients with diabetic nephropathy were significantly increased in PBMCs cultured in high-glucose conditions. In HMCs cultured under high glucose, there were significant increases in NFAT5 binding activities to OREA, OREB, and OREC by 1.38 ± 0.22-, 1.84 ± 0.44-, and 2.38 ± 1.15-fold, respectively. Similar results were found in HMCs exposed to high glucose (aldose reductase 1.30 ± 0.06-fold and sorbitol dehydrogenease 1.54 ± 0.24-fold increases). Finally, the silencing of the NFAT5 gene in vitro reduced the expression of the aldose reductase gene. In conclusion, these results show that aldose reductase is upregulated by the transcriptional factor NFAT5 under high-glucose conditions in both PBMCs and HMCs.