The objective was to estimate chronic kidney disease (CKD) incidence rates from prevalence and mortality data, and compare the estimates with observed (true) incidence rates in a well-characterized population with diabetes. Pima Indians aged 20 years and older with type 2 diabetes were followed from 1982 through 2007. CKD was defined by estimated GFR (eGFR) <60 ml/min/1.72 m2 or albumin-to-creatinine ratio (ACR) ≥30 mg/g. True CKD incidence and mortality rates were computed for the whole study period, and prevalence for the intervals 1982–1994 and 1995–2007. Estimated age-sex stratified CKD incidence rates were computed using illness-death models of the observed prevalences, and of the whole-period mortality rate ratio of CKD to non-CKD persons. Among 1201 participants, 616 incident events of CKD occurred during a median follow-up of 5.6 years. Observed CKD prevalence was 56.9% (95%CI 53.7–60.0) and 48.0% (95%CI 45.2–50.8) in women; 54.0% (95%CI 49.9–58.1) and 49.6% (95%CI 46.0–53.3) in men, across the two periods. Mortality rate was 2.5 (95%CI 1.9–3.3) times as high in women with CKD and 1.6 (95%CI 1.3–2.1) times as high in men with CKD, compared to women or men without CKD. In women, estimated CKD incidence increased linearly from 25.6 (95%CI 4.2–53.0) to 128.6 (95%CI 77.1–196.6) with each 5-year age group up to 69 years, and to 99.8 (95%CI 38.7–204.7) at age ≥70. In men, estimated CKD incidence increased form 28.5 (95%CI 3.8–71.2) at age 20–24 years to 118.7 (95%CI 23.6–336.7) at age ≥70. Age-sex-stratified estimated incidence reflected the magnitude and directional trend of the true incidence and were similar to the true incidence rates (p>0.05 for difference) except for age 20–24 in women (p = 0.008) and age 25–29 in men (p = 0.002). In conclusion, the estimated and observed incidence rates of CKD agree well over 25 years of observation in this well characterized population with type 2 diabetes.