Background and Objectives: Diabetic nephropathy (DN), a common microvascular complication in diabetic patients, is characterized by gradually increasing urinary albumin excretion (UAE), and affects 20-40% of Type 2 Diabetes mellitus (DM) patients in India. The defective insulin action in the metabolism of lipoproteins leads to lipid abnormalities as well as glycation of lipoproteins cause abnormalities in the lipoprotein metabolism in Type 2 DM patients. Dyslipidemia causes glomerular injury which will lead to progression of proteinuria. Methods: 100 Type 2 Diabetic patients with not less than 10 years duration of diabetes were selected and divided in three groups; Normoalbuminuric (n=42), Microalbuminuric (n=41) and Macroalbuminuric (n=17). Lipid profile, HbA1c, S. Creatinine and Urinary Albumin Excretion (UAE) were measured and data analysis was performed. Result: Total Cholesterol (TC), Triglyceride (TG) and LDL-C levels were not significantly associated with increase in proteinuria. HDL-C levels and TG/HDL ratio were significantly associated with different stages of proteinuria. Conclusion: HDL–C levels and TG/HDL ratio can be considered an excellent tool and approach for estimating risk of development of overt proteinuria among Type 2 diabetes patients.