Diabetic kidney disease has been associated with the presence of lipid deposits, but the mechanisms for the lipid accumulation have not been fully determined. In the present study, we found that db/db mice on the FVB genetic background with loss-of-function mutation of the leptin receptor (FVB-Lepr^db mice or FVB^db/db) develop severe diabetic nephropathy, including glomerulosclerosis, tubulointerstitial fibrosis, increased expression of type IV collagen and fibronectin, and proteinuria, which is associated with increased renal mRNA abundance of transforming growth factor-β, plasminogen activator inhibitor-1, and vascular endothelial growth factor. Electron microscopy demonstrates increases in glomerular basement membrane thickness and foot process (podocyte) length. We found that there is a marked increase in neutral lipid deposits in glomeruli and tubules by oil red O staining and biochemical analysis for cholesterol and triglycerides. We also detected a significant increase in the renal expression of adipocyte differentiation-related protein (adipophilin), a marker of cytoplasmic lipid droplets. We examined the expression of sterol regulatory element–binding protein (SREBP)-1 and -2, transcriptional factors that play an important role in the regulation of fatty acid, triglyceride, and cholesterol synthesis. We found significant increases in SREBP-1 and -2 protein levels in nuclear extracts from the kidneys of FVB^db/db mice, with increases in the mRNA abundance of acetyl-CoA carboxylase, fatty acid synthase, and 3-hydroxy-3-methylglutaryl-CoA reductase, which mediates the increase in renal triglyceride and cholesterol content. Our results indicate that in FVB^db/db mice, renal triglyceride and cholesterol accumulation is mediated by increased activity of SREBP-1 and -2. Based on our previous results with transgenic mice overexpressing SREBP-1 in the kidney, we propose that increased expression of SREBPs plays an important role in causing renal lipid accumulation, glomerulosclerosis, tubulointerstitial fibrosis, and proteinuria in mice with type 2 diabetes.