Diabetic kidney disease (DKD) is a serious complication of diabetes, affecting millions of people worldwide. Inflammation and oxidative stress are key contributors to the development and progression of DKD, making them potential targets for therapeutic interventions. Sodium-glucose cotransporter 2 inhibitors (SGLT2i) have emerged as a promising class of drugs, with evidence demonstrating that they can improve renal outcomes in people with diabetes. However, the exact mechanism by which SGLT2i exert their renoprotective effects is not yet fully understood. This study demonstrates that dapagliflozin treatment attenuates renal injury observed in type 2 diabetic mice. This is evidenced by the reduction in renal hypertrophy and proteinuria. Furthermore, dapagliflozin decreases tubulointerstitial fibrosis and glomerulosclerosis by mitigating the generation of reactive oxygen species and inflammation, which are activated through the production of CYP4A-induced 20-HETE. Our findings provide insights onto a novel mechanistic pathway by which SGLT2i exerts their renoprotective effects. Overall, and to our knowledge, the study provides critical insights into the pathophysiology of DKD and represents an important step towards improving outcomes for people with this devastating condition.