Diabetic Nephropathy (DN) is a major cause of mortality in patients with Type 1 and 2 diabetes throughout the world. This review draws attention to the important role of microinflammation and the complex pathways implicated in the development and progression of DN. These pathways include the collaboration of metabolic, hemodynamic and hormonal factors with oxidative stress in patients with genetic susceptibility to create an inflammatory milieu. The key role of inflammatory cells in the kidney, particularly infiltrating macrophages and T-lymphocytes is highlighted. The major inflammatory cytokines and chemokines, receptors, adhesion molecules as well as transcription factors and transduction pathways involved in the pathogenesis of DN are also discussed. Understanding of these inflammatory pathways guides important therapeutic appliances and improves the discovery of new therapeutic targets that can be translated into clinical treatments for DN.