The pathogenesis of diabetic kidney disease (DKD) involves multifactorial processes that converge to initiate and advance the disease. Although DKD is not typically classified an inflammatory glomerular disease, mounting evidence supports the involvement of renal inflammation as a key contributor in DKD pathogenesis. However, detailed characteristics of specific immune cell types in the context of diabetic kidneys remain poorly understood. To capture the gene expression changes in specific immune cell subsets in early DKD, we performed a single-cell transcriptomic analysis of CD45-enriched kidney immune cells from control and diabetic OVE26 mice. Unsupervised clustering identified 11 distinct cell types that represented the major immune cells and an unidentified cell type. Focused analysis of mononuclear phagocytes showed increased macrophage subsets in the diabetic kidneys and concomitant increase in both pro-inflammatory and anti-inflammatory macrophages. Moreover, rather than in discrete M1 or M2 states, many macrophage subsets expressed genes consistent with the continuum of activation and differentiation states, and that their gene expression shifted toward increased inflammatory and differentiated status in the diabetic kidneys. Our study provides a comprehensive analysis of heterogeneity in immune cell transcriptomic profiles in early DKD and underscores the dynamic macrophage activation in disease progression.