Underlying molecular mechanisms of the kidney protective effects of sodium glucose co-transporter 2 (SGLT2) inhibitors are not fully elucidated. Therefore, we studied the association between urinary epidermal growth factor (uEGF), a mitogenic factor involved in kidney repair, and kidney outcomes in patients with type 2 diabetes (T2D). The underlying molecular mechanisms of the SGLT2 inhibitor canagliflozin on EGF using single-cell RNA sequencing from kidney tissue were examined. Urinary EGF-to-creatinine ratio (uEGF/Cr) was measured in 3521 CANagliflozin cardioVascular Assessment Study (CANVAS) participants at baseline and week 52. Associations of uEGF/Cr with kidney outcome were assessed using multivariable-adjusted Cox regression models. Single-cell RNA sequencing was performed using protocol kidney biopsy tissue from ten young patients with T2D on SGLT2i, six patients with T2D on standard care only, and six healthy controls (HCs). In CANVAS, each doubling in baseline uEGF/Cr was associated with a 12% (95% confidence interval 1-22) decreased risk of kidney outcome. uEGF/Cr decreased after 52 weeks with placebo and remained stable with canagliflozin (between-group difference +7.3% (2.0-12.8). In young persons with T2D, EGF mRNA was primarily expressed in the thick ascending loop of Henle. Expression in biopsies from T2D without SGLT2i was significantly lower compared to HCs, whereas treatment with SGLT2i increased EGF levels closer to the healthy state. In young persons with T2D without SGLT2i, endothelin-1 emerged as a key regulator of the EGF co-expression network. SGLT2i treatment was associated with a shift towards normal EGF expression. Thus, decreased uEGF represents increased risk of kidney disease progression in patients with T2D. Canagliflozin increased kidney tissue expression of EGF and was associated with a downstream signaling cascade linked to tubular repair and reversal of tubular injury.