Background. Researches have recently reported that serum cystatin C is a more sensitive marker of changes in glomerular filtration rate (GFR) than serum creatinine. We conducted this study to evaluate the significance of serum cystatin C as a more sensitive marker of GFR for early detection of renal impairment in special groups of patients with type 2 diabetes mellitus (DM).Methods. The present study included 40 patients with type 2 DM divided into four equal groups based on their urinary albumin excretion and renal function: group 1 was normoalbuminuric, group 2 was microalbuminuric, group 3 was macroalbuminuric, and group 4 was macroalbuminuric with renal dysfunction. All patients underwent a thorough history, full clinical examination, fasting, and renal function tests. Post-prandial blood glucose levels, glycosylated hemoglobin A1c (HbA1c), proteins, albumin in 24 hr urine, and serum cystatin C were collected. Results. Serum cystatin C and creatinine were significantly higher in macrolbuminuric type 2 diabetic patients with renal dysfunction (group 4: 2.26 ± 1.28, 4.21 ± 2.38 mg/dl, respectively; p < 0.001) than macrolbuminuric type 2 diabetic patients with normal renal function (group 3: 1.04 ± 0.24, 0.96 ± 0.20 mg/dl, respectively), the microalbuminuric group (0.87 ± 0.28, 0.71 ± 0.12 mg/dl, respectively), as well as the normoalbuminuric group (0.55 ± 0.41, 0.60 ± 0.18 mg/dl, respectively). ROC plots demonstrated that area under the curve (AUC) of cystatin C (0.74) was greater than that for creatinine clearance (cr.cl) (0.67) and serum creatinine (s-cr) (0.74); therefore, the sensitivity and diagnostic accuracy of cystatin c was better than cr. cl., and both were better than s-cr. Serum cystatin C showed significant correlation in groups 2-4 with s-cr, cr.cl, and 24 hr urine albumin, but no correlation was found in group 1. Conclusion. Serum cystatin C is a reliable and easily performed marker for GFR to detect renal impairment in patients with type 2 DM.