Diabetic nephropathy is characterized by decreased expression of bone morphogenetic protein-7 (BMP-7) and decreased podocyte number and differentiation. Extracellular antagonists such as connective tissue growth factor (CTGF; CCN-2) and sclerostin domain-containing-1 (SOSTDC1; USAG-1) are important determinants of BMP signaling activity in glomeruli. We studied BMP signaling activity in glomeruli from diabetic patients and non-diabetic individuals and from control and diabetic CTGF+/+ and CTGF+/− mice. BMP signaling activity was visualized by phosphorylated Smad1, −5, and −8 (pSmad1/5/8) immunostaining, and related to expression of CTGF, SOSTDC1, and the podocyte differentiation markers WT1, synaptopodin, and nephrin. In control and diabetic glomeruli, pSmad1/5/8 was mainly localized in podocytes, but both number of positive cells and staining intensity were decreased in diabetes. Nephrin and synaptopodin were decreased in diabetic glomeruli. Decrease of pSmad 1/5/8 was only partially explained by decrease in podocyte number. SOSTDC1 and CTGF were expressed exclusively in podocytes. In diabetic glomeruli, SOSTDC1 decreased in parallel with podocyte number, whereas CTGF was strongly increased. In diabetic CTGF+/− mice, pSmad1/5/8 was preserved, compared with diabetic CTGF+/+ mice. In conclusion, in human diabetic nephropathy, BMP signaling activity is diminished, together with reduction of podocyte markers. This might relate to concomitant overexpression of CTGF but not SOSTDC1. (J Histochem Cytochem 57:623–631, 2009)