Diabetic nephropathy (DN) is the most common cause of end-stage kidney disease worldwide, and is associated with increased morbidity and mortality in patients with both type 1 and type 2 diabetes. Increasing prevalence of diabetes has made the need for effective treatment of DN critical and thereby identifying new therapeutic targets to improve clinical management. Autophagy is a highly conserved 'self-eating' pathway by which cells degrade and recycle macromolecules and organelles. Autophagy serves as an essential mechanism to maintain homeostasis of glomeruli and tubules, and plays important roles in human health and diseases. Impairment of autophagy is implicated in the pathogenesis of DN. Emerging body of evidence suggests that targeting the autophagic pathway to activate and restore autophagy activity may be renoprotective. In this review, we examine current advances in our understanding of the roles of autophagy in diabetic kidney injury, focusing on studies in renal cells in culture, human kidney tissues, and experimental animal models of diabetes. We discuss the major nutrient-sensing signal pathways and diabetes-induced altered intracellular metabolism and cellular events, including accumulation of advanced glycation end-products, increased oxidative stress, endoplasmic reticulum stress, hypoxia, and activation of the renin-angiotensin system, which modulate autophagic activity and contribute to the development of DN. We also highlight recent studies of autophagy and transforming growth factor-β in renal fibrosis, the final common response to injury that ultimately leads to end-stage kidney failure in both type 1 and type 2 diabetes. These findings suggest the possibility that autophagy can be a therapeutic target against DN.