Chitosan-stabilized selenium nanoparticles (CTS-SeNPs) were prepared by reduction technique. Single phase structure of the SeNPs was confirmed using X-ray diffraction (XRD). Transmission Electron Microscope (TEM) showed that the particle size of the samples in the range of 15 nm. This experiment aimed to study the potential effect of (CTS-SeNPs) as a therapeutic factor in diabetic nephropathy in rats. Streptozotocin (STZ) was used to induce diabetes in rats; thirty-six numbers were divided into three groups; control, STZ-induced diabetic, and STZ-induced diabetic rats taken CTS-SeNPs groups at a dose (2 mg Se/kg/d). All groups were given respective treatment orally via gastric tube for 2 month. The obtained data showed that, the diabetic group revealed presence of Microalbuminurea, the indicator of diabetic nephropathy and showed a significant increase in fasting blood glucose, urea, creatinine, TAC and MDA, it is significant that high expression level of TGF-β1 and aldose reductase while the group treated with CTS-SeNPs revealed significant decline in all values compared to the diabetic group. Diabetic group showed a significant decrease in insulin level, GPx and SOD activity while, the treated group showed significant increase in these values compared to the diabetic group. Kidney tissue showed normal histological picture except for mild vascular and glomerular congestion in treated group when compared with diabetic one. Our experiment suggests that CTS-SeNPs can moderate diabetic nephropathy in streptozotocin-induced diabetic rats.