Hyperglycemia induces all isoforms of transforming growth factor β (TGFβ), which in turn play key roles in inflammation and fibrosis that characterize diabetic nephropathy. Sphingosine 1‐phosphate (S1P) is a signaling sphingolipid, derived from sphingosine by the action of sphingosine kinase (SK). S1P mediates many biological processes, which mimic TGFβ signaling. To determine the role of SK1 and S1P in inducing fibrosis and inflammation, and the interaction with TGFβ‐1, 2 and 3 signalling in diabetic nephropathy, human proximal tubular cells (HK2 cells) were exposed to normal (5mM) or high (30mM) glucose or TGFβ‐1, ‐2, ‐3 +/‐ an SK inhibitor (SKI‐II) or SK1 siRNA. Control and diabetic wild type (WT) and SK1‐/‐ mice were studied. Fibrotic and inflammatory markers, and relevant downstream signaling pathways were assessed. SK1 mRNA and protein expression was increased in HK2 cells exposed to high glucose or TGFβ1,‐2,‐3. All TGFβ isoforms induced fibronectin, collagen IV and macrophage chemoattractant protein 1 (MCP1), which were reversed by both SKI‐II and SK1 siRNA. Exposure to S1P increased phospho‐p44/42 expression, AP‐1 binding and NFkB phosphorylation. WT diabetic mice exhibited increased renal cortical S1P, fibronectin, collagen IV and MCP1 mRNA and protein expression compared to SK1‐/‐ diabetic mice. In summary, this study demonstrates that inhibiting the formation of S1P reduces tubulointerstitial renal inflammation and fibrosis in diabetic nephropathy. This article is protected by copyright. All rights reserved.