Increased expression of Induced-by-High-Glucose 1 (IHG-1) associates with tubulointerstitial fibrosis in diabetic nephropathy. IHG-1 amplifies TGF-1 signaling, but the functions of this highly-conserved protein are not well understood. IHG-1 contains a putative mitochondrial-localization domain, and here we report that IHG-1 is specifically localized to mitochondria. IHG-1 overexpression increased mitochondrial mass and stabilized peroxisome proliferator-activated receptor ␥ coactivator-1␣ (PGC-1␣). Conversely, inhibition of IHG-1 expression decreased mitochondrial mass, downregulated mitochondrial proteins, and PGC-1␣-regulated transcription factors, including nuclear respiratory factor 1 and mitochondrial transcription factor A (TFAM), and reduced activity of the TFAM promoter. In the unilateral ureteral obstruction model, we observed higher PGC-1␣ protein expression and IHG-1 levels with fibrosis. In a gene-expression database, we noted that renal biopsies of human diabetic nephropathy demonstrated higher expression of genes encoding key mitochondrial proteins, including cytochrome c and manganese superoxide dismutase, compared with control biopsies. In summary, these data suggest that IHG-1 increases mitochondrial biogenesis by promoting PGC-1␣-dependent processes, potentially contributing to the pathogenesis of renal fibrosis.