In most Western countries, diabetic nephropathy (DN) has become the single most common condition found in patients with end-stage renal disease (ESRD). This is to some extent due to better survival of diabetic patients with renal failure, but mostly due to the dramatic increase in the prevalence of type 2 diabetes. The majority of type 2 diabetic patients with renal failure suffer from nodular glomerulosclerosis (Kimmelstiel-Wilson); but ischemic nephropathy, irreversible acute renal failure (mostly acute on chronic) and diabetes co-existing with primary renal diseases are common as well. Classical DN evolves in a sequence of stages. After a period of glomerular hyperfiltration, increased urinary albumin excretion [microalbuminuria (MA)] i.e. 30-300 mg/day or 20 - 200 microg/minute indicates the onset of overt DN. Risk factors for development of DN are positive family history, hyperglycemia in the mother during pregnancy, high blood pressure, obesity and insulin resistance. Poor glycemic control (HbAlc) and elevated systolic blood pressure (> 135 mm Hg) interact in enhancing the risk of DN. Proteinuria and smoking are major promoters of progression. The risk of onset of microalbuminuria can be reduced by lowering of blood pressure and specifically by blockade of the renin angiotensin system (RAS). In patients with established DN, the target systolic blood pressure should be <130 mm Hg and RAS blockade is obligatory. Treating all cardiovascular risk factors is a high priority. Antihypertensive management is rendered difficult by extreme volume sensitivity, pronounced activation of the RAS and autonomic neuropathy. Cardiac events are excessively frequent, glycemic control becomes difficult and autonomic diabetic neuropathy with gastroparesis and diabetic foot are additional problems. Hemodialysis or continuous ambulatory peritoneal dialysis should be started relatively early. In the absence of contraindications, transplantation (renal transplantation, combined kidney/pancreas transplantation or pancreas after kidney transplantation) is the treatment of choice.