Diabetic kidney disease (DKD) has become the primary cause of end-stage renal disease (ESRD), causing an urgent need for preventive strategies for DKD. Astragaloside I (ASI), a bioactive saponin extracted from Astragalus membranaceus (Fisch.) Bunge has been demonstrated to possess a variety of biological activities. This study investigates the therapeutic potential of ASI in DKD and the underlying molecular mechanism using db/db mice in vivo and high glucose (HG)-induced SV40-MES-13 cells in vitro. The results indicated that ASI significantly ameliorated renal dysfunction and mitigated the pathological alterations in the renal tissues of db/db mice. Moreover, ASI was found to reduce the levels of renal fibrosis makers and suppress the activation of TGF-β1/Smad2/3 pathway in both db/db mice and HG-induced SV40-MES-13 cells. Furthermore, ASI downregulated HDAC3 expression, upregulated Klotho expression, and enhanced Klotho release. ASI is directly bound to HDAC3, and the beneficial effects of ASI on Klotho/TGF-β1/Smad2/3-mediciated renal fibrosis in DKD were reversed by the HDAC3 agonist ITSA-1. In conclusion, ASI attenuates renal fibrosis in DKD, and may act through concurrently inhibiting HDAC3 and TGF-β1, thereby regulating HDAC3-mediciated Klotho/TGF-β1/Smad2/3 pathway.