Quinoid dihydropteridine reductase (QDPR) is an enzyme involved in the metabolic pathway of tetrahydrobiopterin (BH4). BH4 is an essential cofactor of nitric oxide synthase (NOS) and can catalyze arginine to citrulline to release nitric oxide. Point mutations of QDPR have been found in the renal cortex of spontaneous Otsuka Long Evans Tokushima Fatty (OLETF) diabetic rats. However, the role of QDPR in DN is not clear. This study investigates the effects of QDPR overexpression and knockdown on gene expression in the kidney. Rat QDPR cDNA was cloned into pcDNA3.1 vector and transfected in human kidney cells (293T). The expression of NOS, transforming growth factor beta 1 (TGF-beta 1), Smad3, and NADPH oxidase were examined by RT-PCR and Western blot analyses. BH4 was assayed by using ELISA. Expression of QDPR was significantly decreased and TGF-beta 1 and Smad3 were increased in the renal cortex of diabetic rats. Transfection of QDPR into 293T cells increased the abundance of QDPR in cytoplasm and significantly reduced the expression of TGF-beta 1, Smad3, and the NADPH oxidases NOX1 and NOX4. Moreover, abundance of neuronal NOS (nNOS) mRNA and BH4 content were significantly increased. Furthermore, inhibition of QDPR resulted in a significant increase in TGF-beta 1 expression. In conclusion, QDPR might be an important factor mediating diabetic nephropathy through its regulation of TGF-beta 1/Smad3 signaling and NADPH oxidase.