There is evidence that inflammatory processes are involved in the development and/or progression of diabetic nephropathy. However, effective treatment for inflammation in the kidneys of diabetic is practically unknown. The rhizomes of Picrorhiza scrophulariiflora (PS) are a traditional medication long used to treat inflammatory diseases. The aim of the present study was to test the hypothesis that the ethanol extract of PS (EPS) may reduce inflammation in patients with diabetic kidneys. Streptozotocin-induced diabetic rats were randomly assigned to two groups treated with a gavage of either EPS or vehicle. A group of non-diabetic control rats was treated concurrently. Compared with vehicle-treated diabetic rats, EPS-treated animals displayed a significant decrease in renal macrophage infiltration and overexpression of chemokine (C-C motif) ligand 2 (CCL2) and TGFB1. This was associated with attenuation of the structural and functional abnormalities of early diabetic nephropathy, such as glomerular hypertrophy, mesangial expansion, and albuminuria. Administration of EPS significantly reduced NADPH oxidase-dependent superoxide generation and decreased expression of malondialdehyde and advanced oxidation protein products in diabetic kidney. These data suggest that EPS might improve diabetic nephropathy, probably through inhibition of redox-sensitive inflammation.