Inhibition of sodium-glucose cotransporter 2 (SGLT2) in the proximal tubule of the kidney has emerged as an effective antihyperglycemic treatment. The potential protective role of SGLT2 inhibition on diabetic kidney disease (DKD) and underlying mechanism, however, remains unknown. In this study, metabolic switch was examined using kidney samples from human with diabetes and streptozocin (STZ)-induced experimental mouse model of diabetes treated with or without SGLT2 inhibitor dapagliflozin. Results were further validated using primarily cultured proximal tubule epithelial cells. We found that DKD development and progression to renal fibrosis entailed profound changes in proximal tubule metabolism, characterized by a switch from fatty acid utilization to glycolysis and lipid accumulation, which is associated with the increased expression of HIF-1α. Diabetes-induced tubulointerstitial damage, such as macrophage infiltration and fibrosis, was significantly improved by dapagliflozin. Consistent with the effects of these beneficial interventions, the metabolic disorder was almost completely eliminated by dapagliflozin. The increased level of HIF-1α in renal proximal tubule was nearly nullified by dapagliflozin. Moreover, dapagliflozin protects against glucose-induced metabolic shift in PTCs via inhibiting HIF-1α. It suggests that SGLT2 inhibition is efficient in rectifying the metabolic disorder and may be a novel prevention and treatment strategy for kidney tubule in DKD.