Diabetic nephropathy is a major cause of end-stage kidney disease, and overactivity of the endocannabinoid/cannabinoid 1 receptor (CB₁R) system contributes to diabetes and its complications. Zucker diabetic fatty (ZDF) rats develop type 2 diabetic nephropathy with albuminuria, reduced glomerular filtration, activation of the renin-angiotensin system (RAS), oxidative/nitrative stress, podocyte loss, and increased CB₁R expression in glomeruli. Peripheral CB₁R blockade initiated in the prediabetic stage prevented these changes or reversed them when animals with fully developed diabetic nephropathy were treated. Treatment of diabetic ZDF rats with losartan, an angiotensin II receptor-1 (Agtr1) antagonist, attenuated the development of nephropathy and down-regulated renal cortical CB₁R expression, without affecting the marked hyperglycemia. In cultured human podocytes, CB₁R and desmin gene expression were increased and podocin and nephrin content were decreased by either the CB₁R agonist arachydonoyl-2′-chloroethylamide, angiotensin II, or high glucose, and the effects of all three were antagonized by CB₁R blockade or siRNA-mediated knockdown of CNR1 (the cannabinoid type 1 receptor gene). We conclude that increased CB₁R signaling in podocytes contributes to the development of diabetic nephropathy and represents a common pathway through which both hyperglycemia and increased RAS activity exert their deleterious effects, highlighting the therapeutic potential of peripheral CB₁R blockade.