Objective To investigate the regulatory effects of astragaloside IV on the hypoxia-inducible factor 1-α (HIF-1α) signaling pathway in diabetic nephropathy and to explore its potential therapeutic mechanisms. Methods We established a diabetic nephropathy mouse model by injecting streptozotocin, and assessed the effects of astragaloside IV on the expression of Collagen I and α-smooth muscle actin by quantitative reverse transcription polymerase chain reaction and Western blot. Datasets of patients with diabetic kidney disease downloaded from the Gene Expression Omnibus (GEO) database were subjected to differential gene enrichment analysis, and activated pathways were screened out. The effects of astragaloside IV in reducing renal fibrosis and the inflammatory response and regulating macrophage polarization were evaluated by immunohistochemistry and flow cytometry. The key role of the HIF-1α pathway in diabetic nephropathy was further validated using the HIF-1α inhibitor LW6. Results Analysis of the GEO database showed that the HIF-1α/nuclear factor-κB signaling pathway was activated in patients with diabetic nephropathy. Astragaloside IV treatment significantly inhibited the expression of HIF-1α and its downstream fibrosis-related molecules in the diabetic nephropathy mouse model, reducing renal fibrosis and inflammatory responses. Astragaloside IV also promoted M2 macrophage polarization while suppressing M1 macrophage activation. The critical role of the HIF-1α pathway in the pathology of diabetic nephropathy was confirmed by experiments using the HIF-1α inhibitor LW6. Conclusions This study demonstrated that astragaloside IV can significantly mitigate fibrosis and inflammation in diabetic nephropathy by regulating the HIF-1α signaling pathway and promoting favorable macrophage polarization.