Chronic diabetes is associated with metabolic and haemodynamic stresses which can facilitate modifications to DNA, proteins and lipids, induce cellular dysfunction and damage, and stimulate inflammatory and fibrotic responses which lead to various types of renal injury. Approximately 30-40% of patients with diabetes develop nephropathy and this renal injury normally progresses in about a third of patients. Due to the growing incidence of diabetes, diabetic nephropathy is now the main cause of end-stage renal disease (ESRD) worldwide. Accumulating evidence from experimental and clinical studies has demonstrated that renal inflammation plays a critical role in determining whether renal injury progresses during diabetes. However, the immune response associated with diabetic nephropathy is considerably different to that seen in autoimmune kidney diseases or in acute kidney injury arising from episodes of ischaemia or infection. This review evaluates the role of the immune system in the development of diabetic nephropathy, including the specific contributions of leucocyte subsets (macrophages, neutrophils, mast cells, T and B lymphocytes), danger-associated molecular patterns (DAMPs), inflammasomes, immunoglobulin and complement. It also examines factors which may influence the development of the immune response, including genetic factors and exposure to other kidney insults. In addition, this review discusses therapies which are currently under development for targeting the immune system in diabetic nephropathy and indicates those which have proceeded into clinical trials.