Purpose Low levels of Free Triiodothyronine (FT3) are associated with poor survival in chronic kidney disease, and the aim of this study was to further assess the relationship between changes in FT3 levels and renal damage in patients with type 2 diabetes based on glomerular and tubular markers. Methods We retrospectively studied 452 type 2 diabetic patients, measured glomerular damage markers (UACR, eGFR) and tubular damage markers (NAG/Cr,β2-MG), analyzed the relationship between FT3 and renal damage by logistic regression models, and plotted restrictive cubic splines. Results 41.6% of subjects had diabetic kidney disease (DKD), and the prevalence of DKD decreased progressively with increasing FT3 levels in the third quartile. Spearman correlation analysis showed that FT3 was negatively associated with UACR, NAG/Cr and β2-MG, while eGFR was positively associated with FT3. Multifactorial analysis, after adjusting for relevant confounders, revealed that compared with the lowest quartile of FT3, the highest quartile reduced the risk of developing urinary albumin (OR = 0.499,95% CI:0.289–0.856), moderate to severe impairment of glomerular filtration rate (OR = 0.106,95% CI:0.032–0.354), renal tubular marker β2 -MG positive (OR = 0.516,95% CI:0.299 to 0.883) and the risk of DKD occurrence (OR = 0.450,95% CI:0.260 to 0.774). In the sample model, FT3 levels below 4.39 pmol/L were associated with an increased risk of glomerular tubule injury and DKD occurrence. Conclusion FT3 is closely associated with glomerular tubular injury and is a protective factor. As FT3 levels (< 4.39 pmol/L) decrease, the risk of developing DKD becomes higher, and FT3 can be used as an independent predictor of developing DKD.