We previously reported that supplementation with 17-estradiol (E₂) attenuates albuminuria, glomerulosclerosis and tubulointerstitial fibrosis in diabetic nephropathy. The present study examined the mechanisms by which E₂ regulates extracellular matrix (ECM) metabolism, a process that contributes to the development of glomerulosclerosis and tubulointerstitial fibrosis. The study was performed in female non-diabetic (ND), streptozotocin-induced diabetic (D) and diabetic with E₂ supplementation (D+E₂) Sprague Dawley rats for 12 weeks. Diabetes was associated with an increase in the renal expression of collagen type IV (ND, 0.22±0.02; D, 0.99±0.09 relative optical density (ROD), P<0.05) and fibronectin protein (ND, 0.36±0.08; D, 1.47±0.08 ROD, P<0.05), as measured by Western blotting. E₂ supplementation partially attenuated this increase in collagen type IV (D+E₂, 0.47±0.10 ROD) and fibronectin (D+E₂, 0.71±0.16 ROD) protein expression associated with D. Diabetes was also associated with a decrease in the expression of matrix metalloproteinase isoform MMP-2 (ND, 0.79±0.01; D, 0.62±0.06, ROD, P<0.05) and MMP-9 protein (ND, 0.49±0.02; D, 0.33±0.03, ROD, P<0.05). E₂ supplementation restored MMP-2 and MMP-9 protein to levels similar or even greater than in the ND kidneys (MMP-2, 0.75±0.06; MMP-9, 0.73±0.01, ROD). The activities of MMP-2 (ND, 7.88±0.44; D, 5.60±0.54, ROD, P<0.05) and MMP-9 (ND, 29.9±1.8; D, 12.9±2.3, ROD, P<0.05), as measured by zymography, were also decreased with D. E₂ supplementation restored MMP-2 and MMP-9 activity to levels similar to that in ND kidneys (MMP-2, 7.66±0.35; MMP-9, D+E₂, 21.4±2.9 ROD). We conclude that E₂ supplementation is renoprotective by attenuating glomerulosclerosis and tubulointerstitial fibrosis by reducing ECM synthesis and increasing ECM degradation.