Objective: Pentoxifylline is a methylxanthine derivative with significant anti-inflammatory, anti-fibrotic properties, and anti-proliferative properties. Some studies have shown that pentoxifylline may have renoprotective effect in chronic kidney disease. However, previous studies had limitations due to a small sample size and heterogeneity of patient’s characteristics. Therefore we investigated whether pentoxifylline has additive protective effect of reducing proteinuria in patients with diabetic nephropathy and residual proteinuria despite adequate therapy with angiotensin-converting enzyme inhibitor (ACEI) or angiotensin Ⅱ receptor blocker (ARB). We also studied the effects of pentoxifylline on glycemic control and insulin resistance. Methods: This was a prospective, randomized double blind, active control, multi-center study. The study protocol was approved by the ethics committee of the Korea Ministry of Food and Drug Safety. 174 patients with type 2 diabetes and albuminuria greater than 30mg/g of creatinine on treatment with ACEI or ARB were randomly assigned to receive pentoxifylline (1200 mg, daily (n = 87) or placebo (n = 87). The endpoint was the effect of pentoxifylline on proteinuria and glucose control, renal function, and inflammatory parameters. Results: After 6 months, treatment with pentoxifylline did not change the amount of proteinuria. Although the estimated glomerular filtration rate (eGFR) decreased in the control group, there was no significant difference from the pentoxifylline group. Pentoxifylline led to a significant reduction in fasting plasma glucose, HbA1c, and homeostatic metabolic assessment (HOMA-IR). Conclusion: Even though we did not find benefits in proteinuria reductions or preservation of renal functions by the addition of pentoxifylline to ACEIs or ARBs, pentoxifylline therapy improved glucose control and insulin resistance in patients with type 2 diabetic nephropathy.