This study aimed to ascertain the causal association between Ras-related C3 botulinum toxin substrate 1 (RAC1) and the incidence and progression of diabetic kidney disease (DKD) through Mendelian randomization analysis. RAC1 expression, evaluated using expression quantitative trait loci data from the eQTLGen Consortium, was served as the exposure variable. Outcomes encompassed the risk of DKD, end-stage renal disease (ESRD), albuminuria assessed by the urinary albumin-to-creatinine ratio (ACR), and estimated glomerular filtration rate (eGFR) among individuals with diabetes. Causal associations were computed using the inverse variance weighted (IVW), weighted median, and MR-PRESSO models. Additionally, we conducted analyses for heterogeneity, horizontal pleiotropy, and sensitivity. This study revealed a causal association between the genetic activation of RAC1 and an elevated risk of DKD among individuals with diabetes [IVW, odds ratio (OR) = 1.28, 95% confidence intervals (CI) 1.08-1.51, P = 0.004]. Furthermore, increased expression of RAC1 was linked to a higher risk of ESRD (IVW, OR = 1.20, 95% CI 1.02-1.43, P = 0.032). Excessive RAC1 expression was causally associated with elevated ACR (IVW, β = 0.052, 95% CI 0.003-0.100, P = 0.036). However, the analysis regarding RAC1 and eGFR showed significant heterogeneity and pleiotropy, with no discernible causal relationship. These findings suggested a positive correlation between the genetic activation of RAC1 and the incidence of DKD, the risk of ESRD, and exacerbated albuminuria among individuals with diabetes. Targeting RAC1 might potentially serve as a therapeutic strategy for DKD.