Accumulation of glomerular matrix is a hallmark of diabetic nephropathy. The serine/threonine kinase Akt mediates glucose-induced upregulation of collagen I in mesangial cells through transactivation of the EGF receptor (EGFR). In addition, in renal tubular cells, glucose-induced secretion of TGF-beta requires phosphoinositide-3-OH kinase, suggesting a possible role for Akt in the modulation of TGF-beta expression, but the mechanisms of Akt activation and its involvement in TGF-beta regulation are unknown. Here, in primary mesangial cells, high glucose induced AktS473 phosphorylation, which correlates with its activation, in a protein kinase C beta (PKC-beta)-dependent manner. Glucose led to PKC-beta1 membrane translocation and association with Akt, and PKC-beta1 immunoprecipitated from glucose-treated cells phosphorylated recombinant Akt on S473. PKC is known to mediate glucose-induced TGF-beta1 upregulation through the transcription factor AP-1; here, inhibitors of phosphoinositide-3-OH kinase, PKC-beta and Akt, and dominant-negative Akt all prevented glucose-induced activation of AP-1 and upregulation of TGF-beta1. Finally, pharmacologic and dominant negative inhibition of EGFR blocked glucose-induced activation of PKC-beta1, phosphorylation of AktS473, activation of AP-1, and upregulation of TGF-beta1. In vivo, the PKC-beta inhibitor ruboxistaurin prevented Akt activation in the renal cortex of diabetic rats. In conclusion, PKC-beta1 is an Akt S473 kinase in glucose-treated mesangial cells, and TGF-beta1 transcriptional upregulation requires EGFR/PKC-beta1/Akt signaling. New therapeutic approaches for diabetic nephropathy may result from targeting components of this pathway, particularly the initial EGFR transactivation.