Diabetic kidney disease and hypertension are the leading causes of kidney failure. The reduction in an estimated glomerular filtration rate (eGFR) in response to chronic exposure to low levels of cadmium (Cd) has been causally linked, however, the exact mechanism is poorly understood. We postulate that the toxicity of Cd and lead (Pb) towards kidney tubular cells impairs their function, particularly their ability to clear filtered proteins, notably β2-microglobulin (β2M). As proteins in the glomerular filtrate is concentrated, it becomes toxic to cells, and thus a further reduction in eGFR. In this study we analyzed data from a Thai cohort of 137 persons of which 72 were diagnosed with diabetes. Blood Cd, blood Pb and urinary excretion of Cd (ECd) were measured to obtain an indication of exposure to these metals. Tubular cell injury and tubular cell function were assessed by measurement of urinary N-acetylglucosaminidase (ENAG) and fractional tubular degradation of β2M (FrTDβ2M), respectively. FrTDβ2M was more strongly associated with eGFR in those with diabetes (β = 0.476) than those without (β = 0.360). Intriguingly, only in those with diabetes, FrTDβ2M was inversely associated with ECd (β = −0.295) as was an association of ENAG with ECd (R2 = 0.071). The mediation analysis infers that a falling eGFR was partially linked to a diminished tubular degradation of β2M, caused by Cd-induced tubular cell injury. In conclusion, individuals with diabetes were especially susceptible to tubular cell injury, reductions in both eGFR and the degradation of filtered proteins following Cd/Pb exposure.