Diabetes mellitus is characterized by chronic inflammation and increased risk of infections, particularly of tissues exposed to the external environment. However, the causal molecular mechanisms that affect immune cells and their functions in diabetes are unclear. Here we show, by transcript and protein analyses, signatures of glucose-induced tissue damage, chronic inflammation, oxidative stress, and dysregulated expression of multiple inflammation- and immunity-related molecules in diabetic kidneys compared with non-diabetic controls. Abnormal signaling involving cytokines, G-protein coupled receptors, protein kinase C isoforms, mitogen-activated protein kinases, nuclear factor-κB (NFκB), and Toll-like receptors (TLR) were evident. These were accompanied by overexpression of negative regulators of NFκB, TLR, and other proinflammatory pathways, e.g., A20, SOCS1, IRAK-M, IκBα, Triad3A, Tollip, SIGIRR, and ST2L. Anti-inflammatory and immunomodulatory molecules, e.g., IL-10, IL-4, and TSLP that favor T H 2 responses were strongly induced. These molecular indicators of immune dysfunction led us to detect the cryptic presence of bacteria and human cytomegalovirus in more than one third of kidneys of diabetic subjects but none in non-diabetic kidneys. Similar signaling abnormalities could be induced in primary human renal tubular epithelial (but not mesangial) cell cultures exposed to high glucose, proinflammatory cytokines and methylglyoxal, and were reversed by combined pharmacological treatment with an antioxidant and a PKC inhibitor. Our results suggest that diabetes impairs epithelial immunity as a consequence of chronic and inappropriate activation of counter-regulatory immune responses, which are otherwise physiological protective mechanisms against inflammation. The immune abnormalities and cryptic renal infections described here may contribute to progression of diabetic nephropathy.