Aim:  Early renal enlargement may predict the future development of nephropathy in patients with diabetes. The epidermal growth factor (EGF)‐EGF receptor (EGFR) system plays a pivotal role in mediating renal hypertrophy, where it may act to regulate cell growth and proliferation and also to mediate the actions of angiotensin II through transactivation of the EGFR. In the present study we sought to investigate the effects of long‐term inhibition of the EGFR tyrosine kinase in an experimental model of diabetes that is characterized by angiotensin II dependent hypertension. Methods:  Female heterozygous streptozotocin‐diabetic TGR(mRen‐2)27 rats were treated with the EGFR inhibitor PKI 166 by daily oral dosing for 16 weeks. Results:  Treatment of TGR(mRen‐2)27 rats with PKI 166 attenuated the increase in kidney size, glomerular hypertrophy and albuminuria that occurred with diabetes. The reduction in albuminuria, with EGFR inhibition in diabetic TGR(mRen‐2)27 rats, was associated with preservation of the number of glomerular cells staining positively for the podocyte nuclear marker, WT1. Immunostaining for WT1 inversely correlated with glomerular volume in diabetic rats. In contrast to agents that block the renin‐angiotensin system (RAS), EGFR inhibition had no effect on either the quantity of mesangial matrix or the magnitude of tubular injury in diabetic animals. Conclusion:  These observations indicate that inhibition of the tyrosine kinase activity of the EGFR attenuates kidney and glomerular enlargement in association with podocyte preservation and reduction in albuminuria in diabetes. Accordingly, targeting the EGF‐EGFR pathway may represent a therapeutic strategy for patients who continue to progress despite RAS‐blockade. This study shows that long‐term administration of an epidermal growth factor‐receptor kinase inhibitor preserves podocytes and suppresses albuminuria in the transgenic (mRen‐2)27 rat model of diabetic nephropathy, although mesangial matrix expansion, tubular injury and hypertension were unaffected. This strategy could potentially help those patients who fail to respond to angiotensin blockade.