Diabetic nephropathy is the leading cause of end-stage renal disease worldwide and an independent risk factor for all-cause and cardiovascular mortalities in diabetic patients. New insights into the molecular mechanisms that underlie the development and progression of microvascular complications of diabetes including nephropathy are emerging rapidly from experimental and clinical studies. Chronic hyperglycemia is a major initiator of diabetic microvascular complications. Activation of diacylglycerol (DAG)-protein kinase C (PKC) pathway, enhanced polyol pathway, increased oxidative stress, and overproduction of advanced glycation end products have all been proposed as potential cellular mechanisms by which hyperglycemia induces diabetic vascular complications. The DAG-PKC pathway contributes to vascular function in many ways such as the regulation of endothelial permeability, vasoconstriction, extracellular matrix synthesis/turnover, cell growth, angiogenesis, cytokine activation, and leukocyte adhesion. We will briefly review the current knowledge base regarding the pathogenic role for the activation of DAG-PKC pathway in diabetic nephropathy and other microvascular complications of diabetes. The results from animal studies and key clinical studies investigating specific effects of the PKC isoforms on the renal and other vascular tissues to induce diabetic complications are also reviewed.