Type 2 Diabetes Mellitus (T2DM) is well known to include an inflammatory component that has been considered to be related to diabetic complications. Diabetic nephropathy (DN) is one of the significant complications as it constitutes the most frequent cause of end-stage renal disease. Tumor Necrosis Factor-α (TNF-α) is known as a multifunctional proinflammatory cytokine which is associated with some pathological processes such as immunoregulation, proliferation, inflammation, and apoptosis. The aim was to explore the association between the TNF-α promoter -1031T/C single nucleotide polymorphism (SNP) and the serum TNF-α level in addition to nephropathy among type 2 diabetic patients. The study included 38 T2DM subjects without nephropathy (DM group), 40 subjects with DN, and 20 controls. Identification of TNF-α promoter gene polymorphism -1031T/C was done by PCR-RFLP, and genotyping was confirmed by direct sequencing. The serum TNF-α level was assessed by ELISA. Correlations were tested by Pearson’s correlation analysis. Logistic regression was used to detect the most independent factor for development of DN. The serum level of TNF-α in the DM group was significantly higher than controls (p<0.001); also, the DN group was considerably higher than controls and DM without nephropathy (p<0.001). Also, there was a significant positive correlation between serum levels of TNF-α with FBG (fasting blood glucose), creatinine, total cholesterol, LDL-C, HbA1c, and microalbumin/creatinine ratio (ACR) among the DN group (p=0.042, <0.001, <0.001, <0.001, 0.027, and 0.043, respectively). Mutant homozygous CC and heterozygous TC genotypes were higher in DN than in DM and controls. C allele was more represented in DN than in DM and controls (p=0.003) while T allele was higher in controls than in DM and DN patients. The levels of TNF-α were higher in subjects who had mutant CC than the wild TT genotype among DN (p<0.001). C allele was more risky for DN than T allele between DN and controls by 5.4-fold (CI: 1.75-16.68) as well as between DN and DM by 2.25-fold (CI: 1.1-4.59). Conclusion. Serum levels of TNF-α were higher in individuals with mutant CC genotype of -1031T/C TNF-α gene, and C allele could be associated with increased risk for nephropathy among patients with T2DM.