Diabetic nephropathy (DN) is a progressive fibrotic condition that may lead to end-stage renal disease and kidney failure. Transforming growth factor-β1 and bone morphogenetic protein-7 (BMP7) have been shown to induce DN-like changes in the kidney and protect the kidney from such changes, respectively. Recent data identified insulin action at the level of the nephron as a crucial factor in the development and progression of DN. Insulin requires a family of insulin receptor substrate (IRS) proteins for its physiological effects, and many reports have highlighted the role of insulin and IRS proteins in kidney physiology and disease. Here, we observed IRS2 expression predominantly in the developing and adult kidney epithelium in mouse and human. BMP7 treatment of human kidney proximal tubule epithelial cells (HK-2 cells) increases IRS2 transcription. In addition, BMP7 treatment of HK-2 cells induces an electrophoretic shift in IRS2 migration on SDS/PAGE, and increased association with phosphatidylinositol-3-kinase, probably due to increased tyrosine/serine phosphorylation. In a cohort of DN patients with a range of chronic kidney disease severity, IRS2 mRNA levels were elevated approximately ninefold, with the majority of IRS2 staining evident in the kidney tubules in DN patients. These data show that IRS2 is expressed in the kidney epithelium and may play a role in the downstream protective events triggered by BMP7 in the kidney. The specific up-regulation of IRS2 in the kidney tubules of DN patients also indicates a novel role for IRS2 as a marker and/or mediator of human DN progression.