Canagliflozin is an SGLT2 inhibitor used for the treatment of type 2 diabetes mellitus. Studies were conducted to investigate the mechanism responsible for renal tubular tumors and pheochromocytomas observed at the high dose in a 2-year carcinogenicity study in rats. At the high dose (100 mg/kg) in rats, canagliflozin caused carbohydrate malabsorption evidenced by inhibition of intestinal glucose uptake, decreased intestinal pH and increased urinary calcium excretion. In a 6-month mechanistic study utilization of a glucose-free diet prevented carbohydrate malabsorption and its sequelae, including increased calcium absorption and urinary calcium excretion, and hyperostosis. Cell proliferation in the kidney and adrenal medulla was increased in rats maintained on standard diet and administered canagliflozin (100 mg/kg), and in addition an increase in the renal injury biomarker KIM-1 was observed. Increased cell proliferation is considered as a proximal event in carcinogenesis. Effects on cell proliferation, KIM-1 and calcium excretion were inhibited in rats maintained on the glucose-free diet, indicating they are secondary to carbohydrate malabsorption and are not direct effects of canagliflozin.