Background: Chronic hypoxia is a well-recognized factor in the pathogenesis of chronic kidney disease (CKD). Loss of microcirculation is thought to lead to enhanced renal hypoxia, which in turn results in the development of fibrosis, a hallmark of progressive CKD. To evaluate the role of functional magnetic resonance imaging (MRI), we performed perfusion, oxygenation, and diffusion MRI measurements in individuals with diabetes and stage 3 CKD. Methods: Fifty-four subjects (41 individuals with diabetes and stage 3 CKD and 13 healthy controls) participated in this study. Data with blood oxygenation level dependent (BOLD), arterial spin labeling perfusion and diffusion MRI were acquired using a 3T scanner. Results: Renal cortical perfusion was reduced in CKD compared to the controls (109.54 ± 25.38 vs. 203.17 ± 27.47 mL/min/100 g; p < 0.001). Cortical apparent diffusion coefficient showed no significant reduction in CKD compared to controls (1,596.10 ± 196.64 vs. 1,668.72 ± 77.29 × 10–6 mm2/s; p = 0.45) but was significantly associated with perfusion. Cortical R2* values were modestly increased in CKD (20.76 ± 4.08 vs. 18.74 ± 2.37 s–1; p = 0.12). Within the CKD group, R2*_Medulla and R2*_Kidney were moderately and negatively associated with estimated glomerular filtration rate. There was a significant association between cortical perfusion and medullary response to furosemide with annual loss of renal function, used as an estimate of CKD progression. Conclusions: Subjects with a moderate degree of CKD had significantly lower renal perfusion. Diffusion and BOLD MRI showed more modest differences between the groups. Individuals with progressive CKD had lower perfusion and response to furosemide.