Diabetic kidney disease is the leading worldwide cause of end stage kidney disease and a growing public health challenge. The diabetic kidney is exposed to many environmental stressors and each cell type has developed intricate signaling systems designed to restore optimal cellular function. The unfolded protein response (UPR) is a homeostatic pathway that regulates endoplasmic reticulum (ER) membrane structure and secretory function. Studies suggest that the UPR is activated in the diabetic kidney to restore normal ER function and viability. However, when the cell is continuously stressed in an environment that lies outside of its normal physiological range, then the UPR is known as the ER stress response. The UPR reduces protein synthesis, augments the ER folding capacity and downregulates mRNA expression of genes by multiple pathways. Aberrant activation of ER stress can also induce inflammation and cellular apoptosis, and modify signaling of protective processes such as autophagy and mTORC activation. The following review will discuss our current understanding of ER stress in the diabetic kidney and explore novel means of modulating ER stress and its interacting signaling cascades with the overall goal of identifying therapeutic strategies that will improve outcomes in diabetic nephropathy.