Diabetic nephropathy (DN), a common complication associated with both type I and type II diabetes mellitus (DM), is a major cause of chronic nephropathy and a common cause of end-stage renal diseases (ESRD) throughout the world. This study is aimed to determine whether dencichine (De) can ameliorate renal damage in high-glucose-and-fat diet combined STZ (streptozocin) induced DN in type II DM rats and to investigate the potential underlying mechanisms. Markers of metabolism, diabetes, and renal function, and levels of extracellular matrix (ECM) collagen I (Col I), collagen IV (Col IV), fibronectin (FN) and laminin (LN), and of proteins in the TGF-β/Smad pathway were analysed through RT-PCR, western blot, immunofluorescence and immunohistochemistry. The results show that De significantly alleviates metabolism disorder, improved renal function, relieved pathological alterations in the glomerulus of DN rats, decreased ECM deposition and increased the ratio of matrix metalloproteinase (MMP)-9 to tissue inhibitor of metalloproteinase (TIMP)-1 both in vivo and in vitro. Moreover, De negatively regulated TGF-β/Smad signalling pathway and increased the expression of Smad7, an endogenic inhibitory Smad located downstream of the signalling pathway. In conclusion, we provide experimental evidence indicating that the renoprotective effect of De could significantly prevent the progression of DN possibly attribute to down-regulation of the TGF-β/Smad pathway and rebalance the deposition and degradation of ECM proteins.