Background: Increased DAN protein (Grem1, Grem2, Grem3, Cerberus, NBL1, SOST, and USAG1) levels are often associated with severe disease-states in adult kidneys. Grem1, SOST, and USAG1 have been demonstrated to be upregulated and play a critical role in the progression of diabetic nephropathy (DN); however, the expression and the role of other DAN family members in DN have not been reported yet. In this study, we investigated the expression and the role of Grem2 in the development of renal lesions in mice with type 2 DN. Methods: Fourteen-week-old BTBR ob/ob (a mouse model of type 2 diabetes mellitus) and control (BTBR, wild type) mice were evaluated for renal functional and structural biomarkers. Urine was collected for protein content assay, and renal tissues were harvested for molecular analysis with real-time PCR, Western blotting, and immunohistochemistry. In vitro studies, human podocytes were transfected with Grem2 plasmid and were evaluated for apoptosis (morphologic assay and Western blotting). To evaluate the Grem2-mediated downstream signaling, the phosphorylation status of Smad2/3 and Smad1/5/8 was assessed. To establish a causal relationship, the effect of SIS3 (an inhibitor for Samd2/3) and BMP-7 (an agonist for Smad1/5/8) was evaluated on Germ2-induced podocyte apoptosis. Results: BTBR ob/ob mice showed elevated urinary protein levels. Renal tissues of BTBR ob/ob mice showed an increased expression of Grem2; both glomerular and tubular cells displayed enhanced Grem2 expression. In vitro studies, high glucose increased Grem2 expression in cultured human podocytes, whereas, Grem2 silencing partially protected podocyte from high glucose-induced apoptosis. Overexpression of Grem2 in podocytes not only increased Bax/Bcl2 expression ratio but also promoted podocyte apoptosis; moreover, an overexpression of Grem2 increased the phosphorylation of Smad2/3 and decreased the phosphorylation of Smad1/5/8; furthermore, SIS3 and BMP-7 attenuated Grem2-induced podocyte apoptosis. Conclusions: High glucose increases Grem2 expression in kidney cells. Grem2 mediates podocyte apoptosis through Smads.