We recently showed that Nop-7-associated 2 (NSA2) originally described in yeast as a nuclear protein involved in ribosomal biogenesis, is a hyperglycemia induced gene involved in diabetic nephropathy [Shahni et al., Elevated levels of renal and circulating Nop-7-associated 2 (NSA2) in rat and mouse models of diabetes, in mesangial cells in vitro and in patients with diabetic nephropathy. Diabetologia 2012;55(March(3)):825–34]. However the function of NSA2 in the cell remains unknown. In the current paper we investigate the possible mechanisms for the involvement of NSA2 in diabetic nephropathy by testing the hypothesis that NSA2 expression is linked to the TGFβ1 pathway. Both TGFβ1 and NSA2 mRNAs were significantly up-regulated in cultured renal mesangial cells in response to high glucose, in mouse kidneys during hyperglycemia, and in developing kidneys of mouse embryos during mesenchymal to epithelial transition. Surprisingly, the previously described nuclear NSA2 protein was predominantly located in the cytosol of cultured renal cells. Exogenous TGFβ1 could elevate NSA2 mRNA/protein levels in cultured mesangial cells and could also affect the cellular localization of NSA2, causing the predominantly cytosolic NSA2 protein to rapidly translocate to the nucleus. Increased NSA2 nuclear staining was seen in diabetic mouse kidneys compared to control kidneys. Knock-down of NSA2 expression using RNA interference resulted in significantly decreased TGFβ1 mRNA/protein, almost abolished TGFβ1 activity, and resulted in significantly reduced mRNA levels of the TGFβ1 downstream gene fibronectin. Our data suggest that NSA2 is acting upstream of the TGFβ1 pathway and that NSA2 is needed for TGFβ1 expression and transcriptional activity. In summary, NSA2, which increases in diabetic nephropathy, may be involved in the actions of TGFβ1 and contribute to the development of diabetic nephropathy.