Diabetic nephropathy (DN) is the most serious microvascular complication of diabetes and the largest single cause of end-stage renal disease (ESRD) in many developed countries. DN is also associated with an increased cardiovascular mortality. It occurs as a result of interaction between both genetic and environmental factors. Hyperglycemia, hypertension, and genetic predisposition are the major risk factors. However, the exact mechanisms of DN are unclear. Despite the benefits derived from strict control of glucose and blood pressure, as well as inhibition of renin-angiotensin-aldosterone system, many patients continue to enter into ESRD. Thus, there is urgent need for improving mechanistic understanding of DN and then developing new and effective therapeutic approaches to delay the progression of DN. This review focuses on recent progress and future perspective about mechanistic insight and management of DN. Some preclinical relevant studies are highlighted and new perspectives of traditional Chinese medicine (TCM) for delaying DN progression are discussed in detail. These findings strengthen the therapeutic rationale for TCM in the treatment of DN and also provide new insights into the development of novel drugs for the prevention of DN. However, feasibility and safety of these therapeutic approaches and the clinical applicability of TCM in human DN need to be further investigated.