Oxidative stress defined as an excessive production of reactive oxygen species (ROS) surpassing existing antioxidative defense mechanisms plays a critical role in the development and progression of diabetic vascular complications including nephropathy. Over production of ROS in diabetic milieu is both a direct consequence of hyperglycemia and an indirect consequence through advanced glycation end products (AGEs) or mediators of glucotoxicity such as cytokines and growth factors. Among many pathways, nicotinamide adenosine dinucleotide phosphate (NADPH) oxidase and mitochondrial dysfunction have been recognized as two major sources of ROS generation in diabetic kidneys, and NADPH oxidase-derived ROS has been shown to facilitate renal mitochondrial superoxide production in hyperglycemia. Low antioxidant bioavailability promotes cellular oxidative stress leading to additional cellular damage. Although large-scale clinical trials using classical antioxidants have failed to show a significant effect on the development of vascular complications in diabetes, new strategies targeting NF-E2-related factor 2, the primary transcription factor that controls the antioxidant response, mitochondrial dysfunction, or NADPH oxidase might provide a potential approach for the prevention and treatment of diabetic nephropathy.