Diabetes mellitus is a group of metabolic diseases characterized by hyperglycemia resulting from defects in insulin secretion and/or action. One of the most important complications of this metabolic disease is diabetic nephropathy. Hyperglycemia promotes oxidative stress and hence generation of reactive oxygen species (ROS), which is known to play a crucial role in the pathogenesis of diabetic nephropathy. Recent studies have established that metformin, an oral hypoglycemic drug, possesses antioxidant effects. However, whether metformin can protect against diabetic nephropathy has not been reported before. The overall objectives of the present study are to elucidate the potential nephroprotective effect of metformin in a rat diabetic nephropathy model and explore the exact underlying mechanism(s) involved. The effect of metformin on the biochemical changes associated with hyperglycemia induced by streptozotocin was investigated in rat kidney tissues. In addition, energy nucleotides (AMP and ATP), and Acetyl-CoA in the kidney homogenates and mitochondria, and the mRNA expression of oxidative stress and pro-inflammatory mediators were assessed. Our results showed that treatment of normoglycemic rats with metformin caused significant increase in ATP, Acetyl-CoA, and CoA-SH contents in kidney homogenates and mitochondria along with profound decrease in AMP level. On the other hand, treatment of diabetic nephropathy rats with metformin normalized all biochemical changes and the energy status in kidney tissues. At the transcriptional levels, metformin treatment caused significant restoration in diabetic nephropathy-induced oxidative stress mRNA levels, particularly GSTα, NQO1, and CAT genes, whereas inhibited TNF-α and IL-6 pro-inflammatory genes. Our data lend further credence for the contribution of metformin in the nephroprotective effect in addition to its well known hypoglycemic action.