Background: Diabetic kidney disease is the leading cause of premature death in young diabetic patients. Detection of diabetic kidney disease as early as possible in the disease process currently offers the best chance of delaying or possibly preventing progression to end-stage renal disease. The present study was aimed to evaluate utility of serum cystatin C based eGFR for early diagnosis of diabetic kidney disease.Methods: Diagnosed patients of type 2 diabetes mellitus having frank proteinuria were excluded. Patients without proteinuria were tested for microalbuminuria. 50 patients having microalbuminuria were tested for 24 hour urine creatinine, serum creatinine and serum cystatin C. Both cystatin C based eGFR and eGFR by Cockcroft and Gault equation were compared with standard GFR by 24 hour urine Creatinine clearance respectively.Results: There was statistically significant positive correlation between cystatin C based eGFR and standard GFR by 24 hr Creatinine clearance (r=0.87). For eGFR by Cockcroft-Gault equation, it was 0.36 (r=0.36).Conclusions: The results of this study suggest that serum cystatin C based eGFR measurement is a useful, practical tool for the evaluation of renal involvement in the course of diabetes. As serum creatinine values are affected by many factors like age, sex, muscle mass and diet, serum cystatin C based eGFR estimation offers a hope that diabetic kidney disease can be well prevented with appropriate interventions.