Insulin and C-peptide are secreted by pancreatic beta cells in equimolar amounts. Although C-peptide has long been believed to have no biological function, in recent years this molecule has been recognized as an independent hormone with a specific G-protein-coupled receptor. Recent evidence suggests that C-peptide may also have a specific nephroprotective effect, particularly in cases of diabetic nephropathy. In animal models of diabetes this beneficial effect has been repeatedly confirmed. Contradictory results have been obtained in humans: on the one hand it was shown that patients with diabetic nephropathy have lower plasma levels of C-peptide than patients with diabetes of similar duration and normal renal function; on the other hand it is also evident that patients affected by type 2 diabetes develop nephropathy even in the presence of high plasma levels of C-peptide, suggesting that in humans C-peptide is likely to have multifaceted activity. This review describes the different arguments supporting or contrasting the notion of C-peptide as a potential new therapy for diabetic nephropathy. It is possible that only a well performed, large-scale clinical study with careful evaluation of the positive and negative effects of C-peptide will finally clarify whether C-peptide reintegration in patients with type 1 diabetes is able to prevent the development and/or control the progression of diabetic nephropathy.