Reactive oxygen species (ROS) and oxidative stress are associated with the progression of diabetic nephropathy (DN). Hydralazine is an antihypertensive agent and may act as a xanthine oxidase (XO) inhibitor to reduce uric acid levels in a mouse renal injury model. This study aimed to investigate the potential mechanisms of hydralazine in experimental DN. Streptozotocin-induced diabetic mice were fed a high-fat diet to generate DN. Human renal proximal tubular epithelial cells were used in vitro. Nitrendipine and allopurinol which can reduce blood pressure or XO activity levels, were used as two positive controls. Hydralazine downregulated NF-κB/p38 signaling pathways and reduced TNF-α/IL-6 expressions in high glucose-stimulated renal proximal tubular epithelial cells. Hydralazine reduced in vitro ROS production via XO inhibition and nuclear factor erythroid 2-related factor 2 (Nrf2)-mediated heme oxygenase (HO)-1 activation. Furthermore, hydralazine reduced high glucose-induced apoptosis by downregulating PARP/caspase-3 signaling. Hydralazine and allopurinol but not nitrendipine reduced serum uric acid levels and systemic inflammation. Hydralazine and allopurinol treatment improved renal function with decreased urinary albumin-to-creatinine ratios, glomerular hypertrophy, glomerulosclerosis, and fibrosis in the kidney of DN mice. While both hydralazine and allopurinol downregulated XO and NADPH oxidase expression, only hydralazine upregulated Nrf2/HO-1 renal expression, suggesting the additional effects of hydralazine independent of XO/ NADPH oxidase inhibition. In conclusion, hydralazine protected renal proximal tubular epithelial cells against the insults of high glucose and prevented renal damage via XO/NADPH oxidase inhibition and Nrf-2/HO-1 activation, suggesting the comprehensive antioxidation and anti-inflammation mechanisms for the management of DN.