The predominant transcription factors regulating key genes in diabetic kidney disease have not been established. The transcription factor upstream stimulatory factor 1 (USF1) is an important regulator of glucose-mediated transforming growth factor (TGF)-β1 expression in mesangial cells; however, its role in the development of diabetic kidney disease has not been evaluated. In the present study, wild-type (WT; USF1 +/+), heterozygous (USF1 +/-), and homozygous (USF1 -/-) knockout mice were intercrossed with Akita mice (Ins2/Akita) to induce type 1 diabetes. Mice were studied up to 36 wk of age. The degree of hyperglycemia and kidney hypertrophy were similar in all groups of diabetic mice; however, the USF1 -/- diabetic mice had significantly less albuminuria and mesangial matrix expansion than the WT diabetic mice. TGF-β1 and renin gene expression and protein were substantially increased in the WT diabetic mice but not in USF1 -/- diabetic mice. The underlying pathway by which USF1 is regulated by high glucose was investigated in mesangial cell culture. High glucose inhibited AMP-activated protein kinase (AMPK) activity and increased USF1 nuclear translocation. Activation of AMPK with AICAR stimulated AMPK activity and reduced nuclear accumulation of USF1. We thus conclude that USF1 is a critical transcription factor regulating diabetic kidney disease and plays a critical role in albuminuria, mesangial matrix accumulation, and TGF-β1 and renin stimulation in diabetic kidney disease. AMPK activity may play a key role in high glucose-induced regulation of USF1.