Objectives. To apply modern text-mining methods to identify candidate herbs and formulae for the treatment of diabetic nephropathy. Methods. The method we developed includes three steps: (1) identification of candidate ancient terms; (2) systemic search and assessment of medical records written in classical Chinese; (3) preliminary evaluation of the effect and safety of candidates. Results. Ancient terms Xia Xiao, Shen Xiao, and Xiao Shen were determined as the most likely to correspond with diabetic nephropathy and used in text mining. A total of 80 Chinese formulae for treating conditions congruent with diabetic nephropathy recorded in medical books from Tang Dynasty to Qing Dynasty were collected. Sao si tang (also called Reeling Silk Decoction) was chosen to show the process of preliminary evaluation of the candidates. It had promising potential for development as new agent for the treatment of diabetic nephropathy. However, further investigations about the safety to patients with renal insufficiency are still needed. Conclusions. The methods developed in this study offer a targeted approach to identifying traditional herbs and/or formulae as candidates for further investigation in the search for new drugs for modern disease. However, more effort is still required to improve our techniques, especially with regard to compound formulae.