Diabetic nephropathy is a serious microvascular complication and one of the main causes of end-stage renal disease. Various studies have revealed that increased oxidative stress is a major pathophysiological mechanism which is involved in the etiology of diabetic nephropathy. Resveratrol, a polyphenolic phytoalexin present in red wine, is known to possess potent antioxidant properties and thus we aimed to examine its effect on renal function and oxidative stress in streptozotocin (STZ)-induced diabetic rats. Diabetes was induced by a single intraperitoneal injection of STZ (65 mg/kg) in rats. After 4 weeks of STZ injection, rats were divided into four groups: the control rats, diabetic rats and diabetic rats treated with resveratrol (5 and 10 mg/kg, orally) respectively from week 4 up till week 6. At the termination of the experiments, urine albumin excretion, urine output, serum creatinine, blood urea nitrogen, creatinine and urea clearance were measured. The levels of the renal oxidative stress markers malonaldehyde and glutathione and the antioxidant enzymes superoxide dismutase and catalase were measured in kidney homogenate. STZ-injected rats showed significant increases in blood glucose, polyuria, proteinuria and a decrease in body weight compared with age-matched control rats. After 6 weeks, diabetic rats exhibited renal dysfunction, as evidenced by reduced creatinine and urea clearance, and proteinuria along with a marked increase in oxidative stress, as determined by lipid peroxidation and activities of key antioxidant enzymes. Treatment with resveratrol significantly attenuated renal dysfunction and oxidative stress in diabetic rats. The present study reinforces the important role of oxidative stress in diabetic kidney and points towards the possible antioxidative mechanism being responsible for the renoprotective action of resveratrol.