Oxidative stress and inflammation are implicated in the occurrence and progression of diabetic nephropathy (DN). Diphenyl diselenide (DPDS) is a stable and simple diaryl diselenide with anti-hyperglycemic, anti-inflammatory, and antioxidant activities. However, the effects of DPDS on DN are still unclear to date. Herein, we aimed to explore whether DPDS could improve renal dysfunction in streptozotocin (STZ)-induced diabetic rats and its underlying mechanisms. STZ-induced DN rats were administered with DPDS (5 or 15 mg/kg) or metformin (200 mg/kg) once daily by intragastric gavage for 12 weeks. DPDS supplementation significantly improved hyperglycemia, glucose intolerance, dyslipidemia, and the renal pathological abnormalities, concurrent with significantly reduced serum levels of creatinine, urea nitrogen, urine volume, and urinary levels of micro-albumin, β2-microglobulin and N-acetyl-glucosaminidase activities. Moreover, DPDS effectively promoted the activities of antioxidant enzymes, and reduced the levels of MDA and pro-inflammatory factors in serum and the kidney. Furthermore, DPDS supplementation activated the renal Nrf2/Keap1 signaling pathway, but attenuated the high phosphorylation levels of NFκB, JNK, p38 and ERK1/2. Altogether, the current study indicated for the first time that DPDS ameliorated STZ-induced renal dysfunction in rats, and its mechanism of action may be attributable to suppressing oxidative stress via activating the renal Nrf2/Keap1 signaling pathway and mitigating inflammation by suppressing the renal NFκB/MAPK signaling pathways, suggesting a potential therapeutic approach for DN.