This study investigated the effect of Phellodendri Cortex extract on hyperglycemia and diabetic nephropathy in streptozotocin-induced diabetic rats. Male Sprague-Dawley rats were divided into normal control (NC), diabetic control (DC), and diabetic treatment with Phellodendri Cortex extract (DP). Over a 4-week experimental period, Phellodendri Cortex extract was administered orally at 379 mg/kg BW/day. The final fasting serum glucose level, urine total protein level, and relative left kidney weight in the DP group were significantly lower than the DC group. Renal XO and SOD activities in the DP group were significantly lower than the DC group and renal CAT activity in the DP group was significantly higher than the DC group. Tubular epithelial change was reduced in the DP group compared to the DC group. These results indicated that Phellodendri Cortex can reduce glucose level and prevent or retard the development of diabetic nephropathy in streptozotocin-induced diabetic rats.