Abstract： Objective： To observe the clinical effect of Shenqi Dihuang Decoction combined with Losartan Potassium Tablets for early diabetic kidney disease (DKD). Methods：A total of 120 cases of early DKD patients were selected as study subjects and divided into the treatment group and the control group according to the random number table method，with 60 cases in each group. The two groups were given basic treatments such as controlling blood glucose，a strict diet，and aerobic exercise； the control group was treated with oral administration of Losartan Potassium Tablets， and the treatment group was additionally treated with Shenqi Dihuang Decoction on the basis of the control group. After 8 weeks of treatment， clinical effects and the levels of blood glucose [fasting blood glucose (FBG)， 2-hour postprandial blood glucose (P2hBG) and glycated hemoglobin (HbA1c)]， inflammatory factors [hypersensitive C-reactive protein (hs-CRP)， and procalcitonin (PCT)]， and kidney function [creatinine (SCr)，blood urea nitrogen (BUN)，and cystatin C (CysC)] were compared between the two groups. Results： After treatment， the total effective rate was 95.00% in the treatment group and 83.33% in the control group，the difference being significant (P＜0.05). After treatment，the levels of FBG，P2hBG，and HbA1c in the two groups were decreased when compared with those before treatment (P＜0.05)，and the levels of FBG， P2hBG， and HbA1c in the treatment group were lower than those in the control group (P＜0.05). After treatment， the levels of hs-CRP and PCT in serum in the two groups were decreased when compared with those before treatment (P＜0.05)，and the levels of hs-CRP and PCT in the treatment group were lower than those in the control group (P＜0.05). After treatment，the levels of BUN，SCr，and CysC in the two groups were decreased when compared with those before treatment (P＜0.05)，and the above three indicators in the treatment group were lower than those in the control group (P＜0.05). Conclusion： Shenqi Dihuang Decoction combined with Losartan Potassium Tablets for early DKD is beneficial for reducing blood glucose levels， alleviating inflammatory reactions， and improving kidney function， with significant clinical effects.