Aims/hypothesis Elevated circulating adipocyte fatty acid-binding protein (AFABP) levels have been found to correlate with diabetic nephropathy staging in cross-sectional studies. However, it remains unclear whether these higher serum levels reflect a role of AFABP in the development of diabetic kidney disease (DKD), or simply result from its impaired renal clearance in DKD.Here we investigated prospectively the prognostic importance of serum AFABP level in the development of adverse renal outcomes in a large clinic-based cohort of participants with type 2 diabetes. Methods Baseline serum AFABP levels were measured in 5454 Chinese participants from the Hong Kong West Diabetes Registry. The association between circulating AFABP levels and incident adverse renal outcomes-defined as a composite endpoint of a sustained 40% decline in eGFR, end-stage renal disease requiring renal replacement therapy or kidney transplantation, or renal deaths-was evaluated using multivariable Cox regression analysis. Results Over a median follow-up of 5 years, 754 of the 5454 participants developed incident adverse renal outcomes. Elevated circulating AFABP levels were independently associated with incident adverse renal outcomes (HR 1.43, 95% CI 1.31, 1.57, p < 0.001) after adjustments for conventional risk factors for DKD progression. Importantly, the prognostic role of serum AFABP was independent of the baseline albuminuria status or eGFR levels of the study participants. Conclusions/interpretation Circulating AFABP levels were predictive of incident adverse renal outcomes, even in participants with relatively well-preserved kidney function at baseline, suggesting its potential to be a useful marker for early risk stratification in DKD.