OBJECTIVE: To determine ethnic differences in the progression of chronic kidney disease (CKD) and risk of end-stage renal failure (ESRF) and death in adults with type 2 diabetes mellitus (T2DM), and to identify predictors of rapid renal decline. DESIGN: Observational community-based cohort study undertaken from 2006 to 2016 with nested case-control study. SETTING: 135 inner London primary care practices contributing to the east London Database. PARTICIPANTS: General practice-registered adults aged 25-85 years with established T2DM and CKD at baseline. OUTCOMES: The annual rate of renal decline was compared between white, south Asian and black groups, and stratified by proteinuria and raised blood pressure (BP) at baseline. Predictors of rapid renal decline were identified in a nested case-control study. Cox proportional hazards regression was used to determine ethnic differences in the risk of ESRF and death. RESULTS: Age-sex adjusted annual decline was greatest in the Bangladeshi population. There was stepwise increase in the rate of decline when stratifying the cohort by baseline proteinuria and BP control, with south Asian groups being most sensitive to the combined effect of proteinuria and raised BP after accounting for key confounders.The odds of rapid renal decline were increased for individuals of Bangladeshi, African and Caribbean ethnicity, those with hypertension, proteinuria, cardiovascular disease and with increasing duration of diabetes. Rapid progression was more frequent in younger age groups. Risk of developing ESRF was highest in the black group compared with the white group (HR 1.88, 95% CI 1.11 to 3.19). Risk of death from any cause was 29% lower in the south Asian group compared with the white group (HR 0.71, 95% CI 0.56 to 0.91). CONCLUSIONS: Proteinuria and hypertension trigger accelerated estimated glomerular filtration rate decline differentially by ethnicity. Active monitoring of younger adults, who have greater odds of rapid progression and the most to gain from interventions, is essential.