Diabetic kidney disease is a worldwide epidemic, and therapies are incomplete. Clinical data suggest that improved renal outcomes by Na+-glucose cotransporter 2 inhibitor (SGLT2i) are partly beyond their antihyperglycemic effects; however, the mechanisms are still elusive. Here, we investigated the effect of the SGLT2i dapagliflozin (DAPA) in the prevention of elevated O-GlcNAcylation and tubular hypoxia as contributors of renal fibrosis. Type 1 diabetes was induced by streptozotocin in adult male Wistar rats. After the onset of diabetes, rats were treated for 6 wk with DAPA or DAPA combined with losartan (LOS). The effect of hyperglycemia was tested in HK-2 cells kept under normal or high glucose conditions. To test the effect of hypoxia, cells were kept in 1% O2 for 2 h. Cells were treated with DAPA or DAPA combined with LOS. DAPA slowed the loss of renal function, mitigated renal tubular injury markers (kidney injury molecule-1 and neutrophil gelatinase-associated lipocalin), and reduced tubulointerstitial fibrosis. DAPA diminished high glucose-induced protein O-GlcNAcylation and moderated the tubular response to hypoxia through the hypoxia-inducible factor pathway. DAPA alone was as effective as combined treatment with LOS in all outcome parameters. These data highlight the role of ameliorated O-GlcNAcylation and diminished tubular hypoxia as important benefits of SGLT2i treatment. Our results support the link between glucose toxicity, tubular hypoxia, and fibrosis, a vicious trio that could be targeted by SGLT2i in kidney diseases of other origins as well.