Nephropathy is a common consequence of diabetes, with a high prevalence in patients with type 1 (15%-25%) and type 2 diabetes mellitus (T2DM; 30%-40%). Nephropathy is associated with a poor prognosis and high economic burden. The risk of developing nephropathy increases with the duration of diabetes, and early diagnosis and treatment of risk factors for nephropathy (e.g., tight control of glycemia and hypertension) can reduce the development and progression of diabetic nephropathy. Advances in our understanding of the mechanisms of renal complications associated with diabetes and the etiology of nephropathy have identified additional risk factors for nephropathy, and novel therapeutic options are being explored. This review discusses the pathophysiology of diabetic nephropathy and common risk factors. Furthermore, we discuss emerging treatments for T2DM that could potentially slow or prevent the progression of diabetic nephropathy. The use of incretin-based therapies, such as the dipeptidyl peptidase-4 (DPP-4) inhibitors and glucagon-like peptide-1 (GLP-1) analogs, is growing in patients with T2DM, due to their efficacy and tolerability profiles. As renal safety is a key factor when choosing treatment options to manage patients with T2DM, drugs that are suitable for use in patients with varying degrees of renal impairment without a requirement for dose adjustment, such as the DPP-4 inhibitor linagliptin, are of particular use. The ongoing advances in T2DM therapy may allow optimization of glycemic control in a wide range of patients, thereby helping to reduce the increasing morbidity and mortality associated with diabetic nephropathy.