Obesity-linked (type 2) diabetic nephropathy (T2DN) has become the largest contributor to morbidity and mortality in the modern world. Recent evidences suggest that inflammation may contribute to the pathogenesis of T2DN and T-regulatory cells (Treg) are protective. We developed a novel cytokine (named IL233) bearing IL-2 and IL-33 activities in a single molecule and demonstrated that IL233 promotes Treg and T-helper (Th) 2 immune responses to protect mice from inflammatory acute kidney injury. Here, we investigated whether through a similar enhancement of Treg and inhibition of inflammation, IL233 protects from T2DN in a genetically obese mouse model, when administered either early or late after the onset of diabetes. In the older mice with obesity and microalbuminuria, IL233 treatment reduced hyperglycemia, plasma glycated proteins, and albuminuria. Interestingly, IL233 administered before the onset of microalbuminuria not only strongly inhibited the progression of T2DN and reversed diabetes as indicated by lowering of blood glucose, normalization of glucose tolerance and insulin levels in islets, but surprisingly, also attenuated weight gain and adipogenicity despite comparable food intake. Histological examination of kidneys showed that saline control mice had severe inflammation, glomerular hypertrophy, and mesangial expansion, which were all attenuated in the IL233 treated mice. The protection correlated with greater accumulation of Tregs, group 2 innate lymphoid cells (ILC2), alternately activated macrophages and eosinophils in the adipose tissue, along with a skewing toward T-helper 2 responses. Thus, the novel IL233 cytokine bears therapeutic potential as it protects genetically obese mice from T2DN by regulating multiple contributors to pathogenesis.