Sphingosine 1-phosphate (S1P), a pleiotropic lipid mediator, binds to five related G-protein-coupled receptors to exert its effects. As S1P1 receptor (S1P1R) activation blocks kidney inflammation in acute renal injury, we tested whether activation of S1P1Rs ameliorates renal injury in early-stage diabetic nephropathy (DN) in rats. Urinary albumin excretion increased in vehicle-treated diabetic rats (single injection of streptozotocin), compared with controls, and was associated with tubule injury and increased urinary tumor necrosis factor-α (TNF-α) at 9 weeks. These effects were significantly reduced by FTY720, a non-selective, or SEW2871, a selective S1P1R agonist. Interestingly, only FTY720 was associated with reduced total lymphocyte levels. Albuminuria was reduced by SEW2871 in both Rag-1 (T- and B-cell deficient) and wild-type diabetic mice after 6 weeks, suggesting that the effect was independent of lymphocytes. Another receptor, S1P3R, did not contribute to the FTY720-mediated protection, as albuminuria was also reduced in diabetic S1P3R knockout mice. Further, both agonists restored WT-1 staining along with podocin and nephrin mRNA expression, suggesting podocyte protection. This was corroborated in vitro, as SEW2871 reduced TNF-α and vascular endothelial growth factor mRNA expression in immortalized podocytes grown in media containing high glucose. Whether targeting kidney S1P1Rs will be a useful therapeutic measure in DN will need direct testing.