Diabetes mellitus (DM) is currently considered a modern global epidemic, and diabetic nephropathy (DN) is the most common cause of chronic kidney disease (CKD). Anemia is one of the most significant complications of CKD, and it is mainly attributed to insufficient erythropoietin (EPO) production. However, anemia develops earlier in the course of CKD among patients with DM, and the severity of anemia tends to be more marked in these patients compared to nondiabetic subjects, regardless of the stage of CKD. In this review, we focus on the "less known" complex interacting mechanisms which are involved in the pathophysiology of anemia associated with DN. Although the major cause of anemia in DN is considered to be an inappropriate response of the plasma EPO concentration to anemia, several other possible mechanisms have been suggested. Glomerular hyperfiltration, proteinuria, renal tubular dysfunction and interstitial fibrosis are among the main culprits. On the other hand, systemic effects such as chronic inflammation, autonomic neuropathy and the renin-angiotensin system are also involved. Finally, several medications are considered to aggravate anemia associated with DN. Since anemia is an important predictor of quality of life and is implicated in the increased burden of cardiovascular morbidity and mortality, further research is required to elucidate its pathogenesis in diabetic patients.