Diabetic kidney disease (DKD) remains the leading cause of end-stage renal disease (ESRD) and is therefore a major burden on the healthcare system. Patients with DKD are highly susceptible to developing cardiovascular disease, which contributes to increased morbidity and mortality rates. While progress has been made to inhibit the acceleration of DKD, current standards of care reduce but do not eliminate the risk of DKD. There is growing appreciation for the role of inflammation in modulating the process of DKD. The focus of this review is on providing an overview of the current status of knowledge regarding the pathologic roles of inflammation in the development of DKD. Finally, we summarize recent therapeutic advances to prevent DKD, with a focus on the anti-inflammatory effects of newly developed agents.