Abstract: Diabetic nephropathy (DN) is a common complication of diabetes and a leading cause of end-stage renal disease. Transforming growth factor-β1 (TGF-β1)/SMAD signaling activation plays an important role in the onset and progression of DN. Reported findings suggest that the activation of TGF-β1 (including the latent form, the active form, and the receptors) and its downstream signaling proteins (SMAD3, SMAD7, etc.) plays a critical role in DN. In addition, TGF-β1/SMAD signaling may mediate the pathogenesis and progression of DN via various microRNAs (miRNAs) and long non-coding RNAs (lncRNAs). Emerging evidence shows that TGF-β1, SMAD3, and SMAD7 are the main signaling proteins that contribute to the development of DN, and that they can be potential targets for the treatment of DN. However, recent clinical trials have shown that the anti-TGF-β1 monoclonal antibody treatment fails to effectively alleviate DN, which suggests that upstream inhibition of TGF-β1/SMAD signaling does not alleviate clinical symptoms and that this may be related to the fact that TGF-β1/SMAD has multiple biological effects. Targeted inhibition of the downstream TGF-β1 signaling (e.g., SMAD3 and SMAD7) may be an effective approach to attenuate DN. This article discussed the current understanding of the molecular mechanisms and potential targets for the treatment and prevention of DN by focusing on TGF-β1/SMAD signaling.