Diabetic nephropathy (DN) is associated with renal mitochondrial injury and decreased renal klotho expression. Klotho is known as an aging suppressor, and mitochondrial dysfunction is the hallmark of aging. Peroxisome proliferator-activated receptor gamma coactivator 1-alpha (PGC1α) is a master regulator of mitochondrial biogenesis, and adenosine monophosphate-activated protein kinase (AMPK) is known as a guardian of mitochondria. Here, we report that recombinant soluble klotho protein (rKL) protects against DN in db/db mice via PGC1α-AMPK-mediated mitochondrial recovery in the kidney. We injected rKL into db/db and db/m mice for 8 weeks and collected the serum and kidney tissue. We treated murine renal tubular cells with rKL in vitro, with and without exposure to 30 mM high glucose (HG). rKL treatment ameliorated major disorders from diabetes, such as obesity, hyperglycemia, and intrarenal reactive oxygen species (ROS) generation, in db/db mice. rKL also diminished albuminuria, recovered renal proximal tubular mitochondria, increased renal p-AMPK and PGC1α, and down-regulated mTOR/TGF-β in db/db mice. In S1 mouse proximal tubular cells, rKL treatment ameliorated HG-mediated cellular and mitochondrial damage and enhanced oxidative phosphorylation, with an increase in PGC1α-AMPK-induced mitochondrial recovery. Our data suggest that klotho exerts a mitochondrial protective effect in diabetic kidney disease by inducing AMPK-PGC1α expression.