Type 2 diabetes (T2D)-associated end-stage kidney disease (ESKD) is a global burden, while the renoprotective effects of metformin remain controversial. In a population-based cohort (2002–2018) including 96,643 patients with T2D observed for 0.7 million person-years, we estimated the risk association of metformin and its dose-relationship with ESKD in a propensity-score overlap-weighting (PS-OW) cohort by eGFR categories. Amongst 96,643, 83,881 (86.8%) had eGFR-G1/G2 (≥60 mL/min/1.73 m2), 8762 (9.1%) had eGFR-G3a (≥45–60 mL/min/1.73 m2), 3051 (3.2%) had eGFR-G3b (≥30–45 mL/min/1.73 m2), and 949 (1.0%) had eGFR-G4 (≥15–30 mL/min/1.73 m2). The respective proportions of metformin users in these eGFR categories were 95.1%, 81.9%, 53.8%, and 20.8%. In the PS-OW cohort with 88,771 new-metformin and 7872 other oral glucose-lowering-drugs (OGLDs) users, the respective incidence rates of ESKD were 2.8 versus 22.4/1000 person-years. Metformin use associated with reduced risk of ESKD (hazard ratio (HR) = 0.43 95% CI: 0.35–0.52 in eGFR-G1/G2, 0.64 0.52–0.79 in eGFR-G3a, 0.67 0.56–0.80 in eGFR-G3b, and 0.63 0.48–0.83 in eGFR-G4). Metformin use was associated with reduced or neutral risk of major adverse cardiovascular events (MACE) (7.2 versus 16.0/1000 person-years) and all-cause mortality (14.6 versus 65.1/1000 person-years). Time-weighted mean daily metformin dose was 1000 mg in eGFR-G1/G2, 850 mg in eGFR-G3a, 650 mg in eGFR-G3b, and 500 mg in eGFR-G4. In a subcohort of 14,766 patients observed for 0.1 million person-years, the respective incidence rates of lactic acidosis and HR in metformin users and non-users were 42.5 versus 226.4 events/100,000 person-years (p = 0.03) for eGFR-G1/G2 (HR = 0.57, 0.25–1.30) and 54.5 versus 300.6 events/100,000 person-years (p = 0.01) for eGFR-G3/G4 (HR = 0.49, 0.19–1.30). These real-world data underscore the major benefits and low risk of lactic acidosis with metformin use down to an eGFR of 30 mL/min/1.73 m2 and possibly even 15 mL/min/1.73 m2, while reinforcing the importance of dose adjustment and frequent monitoring of eGFR.