Diabetic kidney disease is the leading cause of kidney failure worldwide; in the USA, it accounts for over 50% of individuals entering dialysis or transplant programmes. Unlike other complications of diabetes, the prevalence of diabetic kidney disease has failed to decline over the past 30 years. Hyperglycaemia is the primary aetiological factor responsible for the development of diabetic kidney disease. Once hyperglycaemia becomes established, multiple pathophysiological disturbances, including hypertension, altered tubuloglomerular feedback, renal hypoxia, lipotoxicity, podocyte injury, inflammation, mitochondrial dysfunction, impaired autophagy and increased activity of the sodium–hydrogen exchanger, contribute to progressive glomerular sclerosis and the decline in glomerular filtration rate. The quantitative contribution of each of these abnormalities to the progression of diabetic kidney disease, as well as their role in type 1 and type 2 diabetes mellitus, remains to be determined. Sodium–glucose co-transporter 2 (SGLT2) inhibitors have a beneficial impact on many of these pathophysiological abnormalities; however, as several pathophysiological disturbances contribute to the onset and progression of diabetic kidney disease, multiple agents used in combination will likely be required to slow the progression of disease effectively.