Diabetic kidney disease (DKD) increases the risk for mortality and is the leading cause of end-stage renal disease. Treatment with sodium-glucose cotransporter 2 inhibitors (SGLT2i) attenuates the progression of DKD, especially in patients with advanced kidney disease. Herein, we show that in diabetes, mTORC1 activity is increased in renal proximal tubule cells (RPTCs) along with enhanced tubule-interstitial fibrosis; this is prevented by SGLT2i. Constitutive activation of mTORC1 in RPTCs induces renal fibrosis and failure and abolishes the renal-protective effects of SGLT2i in diabetes. On the contrary, partial inhibition of mTORC1 in RPTCs prevents fibrosis and the decline in renal function. Stimulation of mTORC1 in RPTCs turns on a pro-fibrotic program in the renal cortex, whereas its inhibition in diabetes reverses the alterations in gene expression. We suggest that RPTC mTORC1 is a critical node that mediates kidney dysfunction in diabetes and the protective effects of SGLT2i by regulating fibrogenesis.