Diabetes is a disease in which the body does not produce or properly use insulin. Etiological studies of diabetes and its complications showed that oxidative stress might play a major role. Therefore, many efforts have been tried to regulate free oxygen radicals for treating diabetes and its complications. Gamigukihwandong-hwan has been known to be effective for the treatment of diabetes. The present study was carried out to investigate the effect of Gamigukihwandong-hwan on renal function, peroxynitrite (ONOO$^-$) scavenging activity and polyol pathway in streptozotocin-induced diabetic rats. The crushed Gamigukihwandong-hwan was extracted 3 times, each time with 3 volumes of methyl alcohol at 60$^{circ}C$ for 24 h. The extract was filtered and evaporated under a reduced pressure using a rotary evaporator to yield 74.95 g. Gamigukihwandong-hwan extract was oral-administered 100 mg per 1 kg of body weight for 20 days to the diabetic rats induced by streptozotocin (60 mg/kg). The effects of Gamigukihwandong-hwan extract on the streptozotocin-induced diabetic rats were observed by measuring the serum level of glucose, insulin, lipid components, creatinine and BUN, and also the kidney levels of superoxide anion radical (${cdot}O_2^-$), nitric oxide (NO) and ONOO$^-$, and also the enzyme activities involved in polyol pathway. The Effects of Gamigukihwandong-hwan on the streptozotocin-induced diabetic rats with regards to body weight, blood glucose and insulin levels, creatinine and BUN levels, total cholesterol and triglyceride levels, and HDL-cholesterol levels were all shown to be good enough to cure and prevent the diabetes and its complications. Gamigukihwandong-hwan inhibited the generation of ${cdot}O_2^-$, NO and ONOO$^-$ in the kidney of streptozotocin-induced diabetic rats. Renal aldose reductase and sorbitol dehydrogenase activities were increased in the streptozotocin-induced diabetic rats, whereas the ones in the Gamigukihwandong-hwan administered group among the streptozotocin-induced diabetic rats were reversed toward the natural activities. Gamigukihwandong-hwan might inhibit the development of diabetic nephropathy by scavenging reactive oxygen and nitrogen species, thereby by reducing oxidative stresses and also by regulating the activities of polyol pathway enzymes, all of which could help to recover the function of kidney.