Small leucine‐rich proteoglycans (SLRPs), for example, decorin, biglycan, fibromodulin, and lumican, are extracellular matrix organizers and binding partners of TGF‐β. Decorin is also involved in growth control and angiogenesis. Hence, these proteoglycans are likely of importance in the pathogenesis of diabetic glomerulosclerosis. In normal kidney, SLRPs were preferentially expressed in the tubulointerstitium. Weak expression occurred in the mesangial matrix. Biglycan was expressed by glomerular endothelial cells and, together with fibromodulin, by distal tubular cells and in collecting ducts. In all stages of diabetic nephropathy, there was a marked up‐regulation of the proteoglycans in tubulointerstitium and glomeruli. Decorin and lumican became expressed in tubuli. However, in glomeruli, overexpression was not mirrored by local proteoglycan accumulation except in advanced nephropathy. In severe glomerulosclerosis, increased decorin concentrations were found in plasma and urine, and urinary TGF‐β/decorin complexes could be demonstrated indirectly. The failure to detect an increased glomerular proteoglycan quantity during the development of nephropathy could be explained by assuming that they are secreted into the mesangial matrix, but cleared via the vasculature or the urinary tract, in part as complexes with TGF‐β. They could thereby counteract the vicious circle being characterized by increased TGF‐β production and increased matrix deposition in diabetic nephropathy.