Palmitic acid (PA) leads to lipotoxicity in type 2 diabetes and induces oxidative stress in podocytes. Oxidized cellular proteins are degraded by proteasomes. The role of proteasomes in PA- or oxidative stress- induced podocyte injury and pathogenesis of diabetic nephropathy (DN) is unknown. We investigated the effects of PA on expression of 20S and 26S proteasomes, proteasome activator 28 (PA28) regulators, and immunoproteasome in cultured podocytes and renal cortical tissues of db/dband db/m mice using Western blotting. Glomerular areas and glomerular basement membrane (GBM) widths of db/db and db/m mice were examined using morphometry. Short-term incubation of PA or low levels of H2O2 upregulated only immunoproteasome in cultured podocytes. Long-term exposure of podocytes to PA ultimately downregulated the immunoproteasome as with other proteasomes, while oleic acid (OA) or eicosapentaenoic acid (EPA) restored the PA-induced decreased protein levels. In db/db mice, renal cortical immunoproteasome expression with PA28a was significantly decreased as compared with db/m mice, and glomerular areas and GBM widths were significantly increased than db/m mice. Feeding on OA-rich olive oil or EPA-rich fish oil protected the db/db mice against the reduced renal cortical immunoproteasome expression, glomerular enlargement and GBM thickening. These results demonstrate that lipotoxicity downregulates immunoproteasome in podocytes and kidneys of type 2 diabetes, and that OA and EPA protect the type 2 diabetic mice against decreased renal cortical immunoproteasome expression and progression of DN. Given this, lipotoxicity-induced podocyte injury with impaired immunoproteasome expression appears to play an important role in the pathogenesis of DN.