A significant portion of the health burden of diabetic kidney disease (DKD) is caused by both type 1 and type 2 diabetes which leads to morbidity and mortality globally. It is one of the most common diabetic complications characterized by loss of renal function with high prevalence, often leading to acute kidney disease (AKD). Inflammation triggered by gut microbiota is commonly associated with the development of DKD. Interactions between the gut microbiota and the host are correlated in maintaining metabolic and inflammatory homeostasis. However, the fundamental processes through which the gut microbiota affects the onset and progression of DKD are mainly unknown. In this narrative review, we summarised the potential role of the gut microbiome, their pathogenicity between diabetic and non-diabetic kidney disease (NDKD), and their impact on host immunity. A well-established association has already been seen between gut microbiota, diabetes and kidney disease. The gut-kidney interrelationship is confirmed by mounting evidence linking gut dysbiosis to DKD, however, it is still unclear what is the real cause of gut dysbiosis, the development of DKD, and its progression. In addition, we also try to distinguish novel biomarkers for early detection of DKD and the possible therapies that can be used to regulate the gut microbiota and improve the host immune response. This early detection and new therapies will help clinicians for better management of the disease and help improve patient outcomes.