Background: End Stage Renal Disease is the common cuase of morbidity and mortality in patients suffering from diabetes and hypertension. Loss of transferrin and renal impairment in diabetic patients might lead to microcytic anaemia. Progression of nephropathy in these patients can be prevented by checking the hemoglobin levels. Objectives: This study is aimed at identifying the relationship of transferrin levels and anaemia in diabetic nephropathy. Methods: The study included 100 patients who were categorized as 20 normoalbuminuric, 40 microalbuminuric and 40 macroalbuminruic based on urine albumin levles. Serum Transferrin, Hemoglobin were measured in all the three groups. Results: The data obtained concludes that the levels of hemoglobin are significantly reduced in macroalbuminuric (9.0 + 1.61) than mciroalbuminuric (11.5 + 1.71) as compared to normoalbuminuric (13.1 + 1.91) patients. Serum transferrin levels were significantly reduced in macroalbuminuria (207 + 33.7) as compared to normoalbuminuria (263 + 51.8), which in correlation to hemoglobin levels. Conclusion: Anaemia was often seen at an early stage in diabetic nephropathy than in patients with chronic kidney disease. It is, therefore, crucial to monitor anaemia to prevent the progression of renal disease in diabetic patients manifested as microalbuminuria. Plasma transferrin levels are decreased in macroalbuminuria though the synthesis is increased in diabetic nephropathy as the response doesn't compensate for the loss of transferrin in the urine. Further understanding of the mechanism and providing the therapy may improve patient outcomes.