Background Body fluid volume imbalance is common in patients with kidney failure and is associated with all-cause mortality. We hypothesized that fluid volume imbalance occurs in diabetic patients without kidney failure and is associated with change in albuminuria. This study aimed to investigate the association between fluid volume imbalance and albuminuria in patients with type 2 diabetic mellitus without kidney failure. Methods We included 432 and 368 participants in the cross-sectional and retrospective studies. Body fluid imbalance was determined by measuring the extracellular water (ECW) to intracellular water (ICW) ratio (ECW/ICW) using bioelectrical impedance analysis. Change in urinary albumin to creatinine ratio (ACR) was defined as the ratio of urinary ACR at follow-up to that at baseline. ECW/ICW ratio was compared to level of albuminuria. Results In this cross-sectional study, ECW/ICW ratio increased with level of albuminuria (0.634 ± 0.002 in normo-, 0.645 ± 0.003 in micro- and 0.656 ± 0.004 in macroalbuminuria, all p <0.001 by Tukey's HSD test). In addition, there was an association between ECW/ICW ratio and logarithms urinary ACR after adjusting for covariates (β = 0.217, p <0.001). Moreover, ECW/ICW ratio was associated with change in the urinary ACR after adjusting for covariates (β = 0.171, p = 0.005) in this retrospective study. Conclusions ECW/ICW ratio is independently associated with level of albuminuria in patients with type 2 diabetes mellitus without kidney failure. This reinforces the importance of monitoring fluid balance in patients with type 2 diabetes mellitus.