Diabetic kidney disease is one of the complications of diabetes mellitus, which can eventually progress to end-stage kidney disease. The increasing prevalence of diabetic kidney disease has brought huge economic burden to society and seriously jeopardized public health. Ferroptosis is an iron-dependent, non-apoptosis-regulated form of cell death. The regulation of ferroptosis involves different molecular mechanisms and multiple cellular metabolic pathways. In recent years, ferroptosis has been proved to be closely related to the occurrence and development of diabetic kidney disease, and can interact with pathological changes such as fibrosis, inflammation, oxidative stress, and disorders of glucose and lipid metabolism, destroying the structure, form and function of the inherent cells of the kidney, and promoting the progression of the disease. Traditional Chinese medicine has a long history of treating diabetic kidney disease with remarkable curative effect. Current scholars have shown that the oral administration of traditional Chinese medicine and the external treatment of Chinese medicine can regulate GPX4, Nrf2, ACSL4, PTGS2, TFR1 and other key signaling molecules, curb ferroptosis, and prevent the progressive deterioration of diabetic kidney disease. In this paper, the mechanism of ferroptosis and diabetic kidney disease and the prevention and treatment of traditional Chinese medicine are analyzed and summarized, in order to provide new ideas and new plans for the treatment of diabetic kidney disease.