We examined the biopsy specimens of 62 patients with diabetic nephropathy to establish whether the myofibroblast (MF) has a role in progressive interstitial fibrosis and to ascertain whether a relationship existed between MF activity and severity of arteriolosclerosis. MF were identified by morphology and α smooth muscle actin (αSMA) immunostaining. Analysis of vascular injury was performed by counting the number of interstitial arterioles after staining endothelial cells with von Willebrand factor (VWF) antibody. Arteriosclerosis was quantified by using a computer-aided image analyzer to measure the arteriolar wall surface and total arteriolar surface area, and the ratio of wall to total surface area was expressed as the index of arteriosclerosis (IA). Fractional area of interstitium (IFA), αSMA, and collagen III (Coll III) were quantitated by point counting. Results were related to structural and functional parameters using rank correlation coefficients. There was a strong correlation between IFA and Coll III staining (r = 0.83; P < 0.001). The αSMA staining correlated with IFA (r = 0.56; P < 0.001) and Coll III (r = 0.47; P < 0.001), and there were significant correlations between aSMA and total urinary protein (r = 0.47; P < 0.001), renal function (plasma creatinine) at time of biopsy (r = 0.51; P < 0.001), and the percent change in plasma creatinine after 4 years (ΔCr)(r = 0.37; P = 0.01). The IA correlated significantly with Coll III (r = 0.29; P = 0.02), glomerular filtration rate (GFR) (r = 0.39; P = 0.008), and creatinine (r = 0.33; P = 0.01), but no correlation was observed between αSMA and IA (r = 0.16; P = 0.23) or IA and ΔCr (r = −0.04; P = 0.8). Strong correlations could be shown between arteriolar density, IFA (r = 0.75; P < 0.001), αSMA (r = −0.36; P = 0.034), and Coll III (r = −0.66; P < 0.0001). The MF appears to have a significant role in the progression of diabetic nephropathy. Ischemia secondary to arteriosclerosis may contribute to interstitial fibrosis through fibroblast modulation into MF.