Prolonged exposure to hyperglycemia is now recognized as the most significant causal factor of diabetic complications. Excessive advanced glycation end products (AGEs) as a result of hyperglycemia in tissues or in the circulation may critically affect the progression of diabetic nephropathy. In diabetic nephropathy, glomerulosclerosis is a typical pathologic feature characterized by the increase of the extracellular matrix (ECM). We have reported previously that alpha1 type IV collagen (Col4) is one of the major components of ECM, which is up-regulated by AGEs, and that the overexpression of Col4 is transcriptionally regulated by an unknown transcription factor binding to the promoter. Here we identified this protein as Smad1 by yeast one-hybrid screening. Using chromatin immunoprecipitation and reporter assay, we observed that Smad1 directly regulated transcription for Col4 through the binding of Smad1 to the promoter of Col4. Smad1 was significantly induced along with Col4 in AGE-treated mesangial cells. Moreover, suppression of Smad1 by antisense morpholino resulted in a decrease of AGE-induced Col4 overproduction. To elucidate the interaction between transforming growth factor-beta and Smad1, we investigated whether activin receptor-liked kinase1 (ALK1) was involved in this regulation. AGE stimulation significantly increased the expression of the ALK1 mRNA in mesangial cells. We also demonstrated that Smad1 and ALK1 were highly expressed in human diabetic nephropathy. These results suggest that the modulation of Smad1 expression is responsible for the initiation and progression of diabetic nephropathy and that blocking Smad1 signaling may be beneficial in preventing diabetic nephropathy and other various diabetic complications.