Although diabetes is mainly diagnosed based on elevated glucose levels, dyslipidemia is also observed in these patients. Chronic kidney disease (CKD), a frequent occurrence in patients with diabetes, is associated with major abnormalities in circulating lipoproteins and renal lipid metabolism. At baseline, most renal epithelial cells rely on fatty acids as their energy source. CKD, including that which occurs in diabetes, is characterized by tubule epithelial lipid accumulation. Whether this is due to increased uptake or greater local fatty acid synthesis is unknown. We have recently shown that CKD also leads to decreased fatty acid oxidation, which might be an additional mechanism leading to lipid accumulation. Defective fatty acid utilization causes energy depletion resulting in increased apoptosis and dedifferentiation, which in turn contributes to fibrosis and CKD progression. Enhanced fatty acid oxidation in the kidney induced by fenofibrate, a peroxisomal proliferator-activated receptor (PPAR)-α agonist, showed benefit in mouse models of CKD. Fenofibrate treatment also reduced albuminuria in patients with diabetes in multiple clinical trials. Taken together, these findings suggest that further understanding of lipid metabolism in diabetic kidney disease may lead to novel therapeutic approaches.