The innate immune system includes several classes of pattern recognition receptors (PRRs), including membrane-bound Toll-like receptors (TLRs) and nucleotide-binding oligomerization domain (NOD)-like receptors (NLRs). These receptors detect pathogen-associated molecular patterns (PAMPs) and danger-associated molecular patterns (DAMPs) in the extracellular and intracellular space. Intracellular NLRs constitute inflammasomes, which activate and release caspase-1, IL-1β, and IL-18 thereby initiating an inflammatory response. Systemic and local low-grade inflammation and release of proinflammatory cytokines are implicated in the development and progression of diabetes mellitus and diabetic nephropathy. TLR2, TLR4, and the NLRP3 inflammasome can induce the production of various proinflammatory cytokines and are critically involved in inflammatory responses in pancreatic islets, and in adipose, liver and kidney tissues. This Review describes how innate immune system-driven inflammatory processes can lead to apoptosis, tissue fibrosis, and organ dysfunction resulting in insulin resistance, impaired insulin secretion, and renal failure. We propose that careful targeting of TLR2, TLR4, and NLRP3 signalling pathways could be beneficial for the treatment of diabetes mellitus and diabetic nephropathy.