Transforming growth factor-β (TGF-β) is key in the pathogenesis of diabetic nephropathy. Thrombospondin 1 (TSP1) expression is increased in diabetes, and TSP1 regulates latent TGF-β activation in vitro and in diabetic animal models. Herein, we investigate the effect of blockade of TSP1-dependent TGF-β activation on progression of renal disease in a mouse model of type 1 diabetes (C57BL/6J-Ins2Akita) as a targeted treatment for diabetic nephropathy. Akita and control C57BL/6 mice who underwent uninephrectomy received 15 weeks of thrice-weekly i.p. treatment with 3 or 30 mg/kg LSKL peptide, control SLLK peptide, or saline. The effects of systemic LSKL peptide on dermal wound healing was assessed in type 2 diabetic mice (db/db). Proteinuria (urinary albumin level and albumin/creatinine ratio) was significantly improved in Akita mice treated with 30 mg/kg LSKL peptide. LSKL treatment reduced urinary TGF-β activity and renal phospho-Smad2/3 levels and improved markers of tubulointerstitial injury (fibronectin) and podocytes (nephrin). However, LSKL did not alter glomerulosclerosis or glomerular structure. LSKL did not increase tumor incidence or inflammation or impair diabetic wound healing. These data suggest that selective targeting of excessive TGF-β activity through blockade of TSP1-dependent TGF-β activation represents a therapeutic strategy for treating diabetic nephropathy that preserves the homeostatic functions of TGF-β. Copyright © 2011 American Society for Investigative Pathology.