The pathogenesis of diabetic kidney disease (DKD) involves multifactorial processes that converge to initiate and advance the disease. Although DKD is not typically classified as an inflammatory glomerular disease, mounting evidence supports the involvement of kidney inflammation as a key contributor in DKD pathogenesis, particularly through macrophages. However, detailed identification and corresponding phenotypic changes of macrophages in DKD remain poorly understood. To capture the gene expression changes in specific macrophage cell subsets in early DKD, we performed single-cell transcriptomic analysis of CD45-enriched kidney immune cells from type 1 diabetic OVE26 mice at two time points during the disease development. We also undertook a focused analysis of mononuclear phagocytes (macrophages and dendritic cells). Our results show increased resident and infiltrating macrophage subsets in the kidneys of mice with diabetes over time, with heightened expression of pro-inflammatory or anti-inflammatory genes in a subset-specific manner. Further analysis of macrophage polarization states in each subset in the kidneys showed changes consistent with the continuum of activation and differentiation states, with gene expression tending to shift toward undifferentiated phenotypes but with increased M1-like inflammatory phenotypes over time. By deconvolution analysis of RNAseq samples and by immunostaining of biopsies from patients with DKD, we further confirmed a differential expression of select genes in specific macrophage subsets essentially recapitulating the studies in mice. Thus, our study provides a comprehensive analysis of macrophage transcriptomic profiles in early DKD that underscores the dynamic macrophage phenotypes in disease progression.