<b><i>Background:</i></b> Diabetic nephropathy has become the most common cause of chronic kidney disease (CKD). Despite the progress accomplished in therapy, the prevalence of renal disorders remains high. Some modifiable factors driving the increase in incidence of CKD, in diabetes and other settings, might have been overlooked. Consistent evidence supports a role for vasopressin, hydration state, and urine concentration in kidney health. <b><i>Summary:</i></b> Plasma vasopressin is elevated in diabetes, even if metabolic control is good. Several epidemiological studies have pointed to a positive association between markers of vasopressin secretion (24-h fluid intake, urine volume, plasma copeptin concentration) and renal function decline in both the community and populations at high risk of CKD, namely, diabetic patients. Research involving animal models also supports a critical causal role of the V2 receptor antidiuretic effects of vasopressin in the early signs of kidney disease associated with type 1 or type 2 diabetes. <b><i>Key Messages:</i></b> Data supporting the detrimental effects of chronic vasopressin action on the kidney is consistent in animal models and human observational studies. Since vasopressin secretion can be modulated by water intake, and its actions by selective receptor antagonists, the vasopressin-hydration system could be a potential therapeutic target for the prevention and treatment of diabetic nephropathy. Intervention studies are needed to examine the relevance of lifestyle or pharmacological interventions.