Aims This joint document of the Italian Diabetes Society and the Italian Society of Nephrology reviews the natural history of diabetic kidney disease (DKD) in the light of the recent epidemiological literature and provides updated recommendations on anti-hyperglycemic treatment with non-insulin agents. Data Synthesis Recent epidemiological studies have disclosed a wide heterogeneity of DKD. In addition to the classical albuminuric phenotype, two new albuminuria-independent phenotypes have emerged, i.e., "nonalbuminuric renal impairment" and "progressive renal decline", suggesting that DKD progression toward end-stage kidney disease (ESKD) may occur through two distinct pathways, albuminuric and nonalbuminuric. Several biomarkers have been associated with decline of estimated glomerular filtration rate (eGFR) independent of albuminuria and other clinical variables, thus possibly improving ESKD prediction. However, the pathogenesis and anatomical correlates of these phenotypes are still unclear. Also the management of hyperglycemia in patients with type 2 diabetes and impaired renal function has profoundly changed during the last two decades. New anti-hyperglycemic drugs, which do not cause hypoglycemia and weight gain and, in some cases, seem to provide cardiorenal protection, have become available for treatment of these individuals. In addition, the lowest eGFR safety thresholds for some of the old agents, particularly metformin and insulin secretagogues, have been reconsidered. Conclusions The heterogeneity in the clinical presentation and course of DKD has important implications for the diagnosis, prognosis, and possibly treatment of this complication. The therapeutic options for patients with type 2 diabetes and impaired renal function have substantially increased, thus allowing a better management of these individuals.