Diabetic kidney disease (DKD) is the leading cause of kidney failure worldwide. Mortality and morbidity associated with DKD are increasing with the global prevalence of type 2 diabetes. Chronic, sub-clinical, non-resolving inflammation contributes to the pathophysiology of renal and cardiovascular disease associated with diabetes. Inflammatory biomarkers correlate with poor renal outcomes and mortality in patients with DKD. Targeting chronic inflammation may therefore offer a route to novel therapeutics for DKD. However, the DKD patient population is highly heterogeneous, with varying etiology, presentation and disease progression. This heterogeneity is a challenge for clinical trials of novel anti-inflammatory therapies. Here, we present a conceptual model of how chronic inflammation affects kidney function in five compartments: immune cell recruitment and activation; filtration; resorption and secretion; extracellular matrix regulation; and perfusion. We believe that the rigorous alignment of pathophysiological insights, appropriate animal models and pathology-specific biomarkers may facilitate a mechanism-based shift from recruiting 'all comers' with DKD to stratification of patients based on the principal compartments of inflammatory disease activity.