Renal dysfunction is a hallmark of established diabetes mellitus. We tested the hypothesis that impairment of the peroxisome proliferator activated receptor- (PPAR) initiates the renal dysfunction by increasing renal-glomerular matrix metalloproteinase-2 (MMP-2) activity because of increased renal homocysteine (Hcy) and decreased nitric oxide levels. C57BL/6J mice were made diabetic (D) by feeding a high fat-calorie diet and an increase in PPAR activity was induced by adding pioglitazone (Pi) to the diet. Mice were grouped into: Normal calorie diet (N), D, N+Pi and D+Pi (n=6 in each group). In each mouse, glomerular filtration rate (GFR), renal artery blood flow and pressure, and plasma glucose were measured. Renal-glomeruli and pre-glomerular arterioles were isolated. Plasma and glomerular levels of nitric oxide (NO), Hcy, and MMP activity were measured. The contractile response to phenylephrine and dilatation response to acetylcholine in renal arteriolar rings were measured in a tissue myobath. In N, D, N+Pi and D+Pi groups, respectively, GFR was 9.4±1.2, 3.9±1.1, 9.2±1.6 and 8.4±1.4 µl/min/g of body weight. Renovascular resistance was 140±3, 367±21, 161±9, and 153±10 mmHg/ml/min. Blood glucose levels were 2-fold higher in D as compared to N groups. There was 25% decrease in blood glucose levels in D+Pi group as compared to D group. The levels of Hcy were increased from 5.8±1.5 in N to 18.0±4.0 µmol/L in D groups. There was no effect of Pi on plasma levels of Hcy. The glomerular levels of MMP-2 were increased in D mice as compared with N mice, and there was no change in the levels of MMP-9. The treatment with Pi ameliorated the glomerular levels of MMP-2 and Hcy in D group. Renal artery ring contraction and relaxation by phenylephrine and acetylcholine, respectively, were attenuated in D groups as compared with N groups. Treatment with Pi ameliorated these attenuations. The results suggest that PPAR agonist ameliorates glomerular remodeling and the contractile impairment in diabetes, in part, by decreasing tissue levels of Hcy and MMP-2 activity and increasing NO.