Diabetic nephropathy is one of the major microvascular complications of diabetes mellitus. Adiponectin is an adipose tissue-derived cytokine that was identified in a human adipose tissue cDNA library. Serum adiponectin levels are found to be reduced in various pathological states including obesity, diabetes mellitus, ischaemic heart disease and arteriosclerosis obliterans and elevated in end stage renal diseases.to assess the level of plasma adiponectin as an early predictor of microvascular complications in patients with type 2 diabetes mellitus.44 patients with type 2 diabetes recruited from outpatient diabetes clinic in Kasr Alainy hospital. All patients were subjected to full laboratory work-up including: Fasting blood glucose and Post prandial blood glucose, Glycated haemoglobin A1C, Serum creatinine, Serum total cholesterol, Triglycerides, Low density lipoprotein, High density lipoprotein, C-reactive protein titre, serum adiponectin and Urinary albumin/creatinine (UAC) ratio.The present study demonstrated that serum adiponectin concentrations had significant positive correlation with UAC ratio (r = 0.534, p = 0.0001). Adiponectin levels showed significant positive correlation in patients with diabetes and hypertension with microalbumiuria (p = .001) or normoalbumiuria (p = 0.004).Serum adiponectin level can be a good predictor of diabetic nephropathy in patients with type 2 diabetes mellitus.