The purpose of this protocol is to examine the effects of the sodium-glucose cotransporter 2 (SGLT2) inhibitor empagliflozin on kidney disease progression in American Indians with type 2 diabetes and early diabetic kidney disease (DKD) via a double-blinded placebo-controlled clinical trial. This trial will enroll 100 participants who will be randomly assigned to receive either 10 mg of empagliflozin or placebo daily for three years in addition to standard of care. Participants will be followed quarterly to monitor their health, identify any adverse effects of treatment, and to assess their adherence to therapy. The primary objective of this study is to determine whether empagliflozin affects structural and functional progression of DKD in American Indians with type 2 diabetes and early DKD to a greater extent than standard diabetes care alone, which may include treatment with renin-angiotensin system (RAS) blockers. The primary outcome measure will be a change in cortical interstitial fractional volume \[Vv(Int/cortex)\] as assessed by morphometric examination of kidney biopsy specimens obtained at study entry and after the three years of study drug treatment. Secondary outcomes include an effect of empagliflozin on kidney function including measures of glomerular filtration rate and renal plasma flow, and effects on other kidney biopsy morphometric measurements. Biopsy tissue will also be used for gene expression studies and for epigenetic profiling. Magnetic resonance imaging of the kidneys will be performed prior to each biopsy to correlate the structural damage seen at kidney biopsy with the level of fibrosis detected by imaging. In addition to annual renal clearance studies we will conduct a series of other tests at each renal clearance visit. These will include tests of cognitive function and of the peripheral and autonomic nervous system to determine the frequency, severity, and rate of progression of diabetic neuropathy in this cohort and identify linkages between DKD and diabetic neuropathy, and retinal photographs to assess diabetic retinopathy status and its linkage with DKD. The effect of treatment with empagliflozin on the development and progression of neuropathy and retinopathy will also be assessed. To assess acute effects of empagliflozin on renal function at the commencement and cessation of the drug we will undertake additional renal clearance studies two weeks after enrollment and two months after discontinuation of the drug. A small punch skin biopsy may be performed for assessment of intraepidermal nerve fiber density or for fibroblast culture. The skin biopsy for fibroblast culture will be done only once unless the culture fails, in which case the patient may be invited to undergo another biopsy. We may invite participants to undergo skin biopsy on several occassions for assessment of changes in nerve fiber density. We may also perform magnetic resonance imaging of the kidneys or the brain in some participants. Imaging of the kidneys will be done as near to the time of each kidney biopsy as possible. We may invite participants to undergo the brain imaging at the beginning and end of the study. Participants will be followed annually after completion of the clinical trial until death or development of end-stage renal disease.