C-peptide reduces diabetes-induced glomerular hyperfiltration in diabetic patients and experimental animal models. However, the mechanisms mediating the beneficial effect of C-peptide remain unclear. We investigated whether altered renal afferent-efferent arteriole tonus or alterations in tubular Na+ transport (T(Na)) in response to C-peptide administration mediate the reduction of diabetes-induced glomerular hyperfiltration. Glomerular filtration rate, filtration fraction, total and cortical renal blood flow, total kidney O2 consumption (QO2), T(Na), fractional Na+ and Li+ excretions, and tubular free-flow and stop-flow pressures were measured in anesthetized adult male normoglycemic and streptozotocin-diabetic Sprague-Dawley rats. The specific effect of C-peptide on transport-dependent QO2 was investigated in vitro in freshly isolated proximal tubular cells. C-peptide reduced glomerular filtration rate (-24%), stop-flow pressure (-8%), and filtration fraction (-17%) exclusively in diabetic rats without altering renal blood flow. Diabetic rats had higher baseline T(Na) (+40%), which was reduced by C-peptide. Similarly, C-peptide increased fractional Na+ (+80%) and Li+ (+47%) excretions only in the diabetic rats. None of these parameters was affected by vehicle treatments in either group. Baseline QO2 was 37% higher in proximal tubular cells from diabetic rats than controls and was normalized by C-peptide. C-peptide had no effect on ouabain-pretreated diabetic cells from diabetic rats. C-peptide reduced diabetes-induced hyperfiltration via a net dilation of the efferent arteriole and inhibition of tubular Na+ reabsorption, both potent regulators of the glomerular net filtration pressure. These findings provide new mechanistic insight into the beneficial effects of C-peptide on diabetic kidney function.