Diabetic nephropathy (DN) is a major microvascular complication accounting for about 30% of End-Stage Renal Disease (ESRD) cases. An insertion/deletion (I/D) polymorphism of the gene encoding angiotensin-I converting enzyme (ACE) is reported to be a candidate gene predisposing to diabetic nephropathy. Accordingly, we investigated the ACE I/D gene polymorphism in 52 Type 2 diabetes mellitus (T2DM) cases suffering from nephropathy as assessed by 24 hrs urinary protein levels. 50 age and sex matched healthy subjects served as controls. ACE I/D genotyping was carried out by polymerase chain reaction (PCR) amplification using allele specific primers. The frequencies of ACE DD, ID and II genotypes in the diabetic nephropathy patients were 38.5% , 50% and 11.5% and in the control subjects, 22%, 38% and 40% respectively. There was an increase of 16.5% in the frequency of DD genotype in the patients compared to controls. The frequency of D allele in the patients was 63% which was found to be statistically significant (p< 0.05, Odds ratio=2.6) compared to 41% in the controls. These results indicate that Type 2 diabetic patients with D allele (those with DD & ID genotypes) have more than two fold risk of developing nephropathy. Clinical implications of ACE genotyping in planning for patient’s management have been discussed.