A study aimed to find the diagnostic accuracy of serum Cystatin C as an early marker for detection of diabetic kidney disease and to establish a cut–off point and determine the ability of cystatin C to predict a microalbuminuria. The study includes 66 patients of Type 2 Diabetes mellitus admitted to or treated on out–patient basis at Rajendra Institute of Medical Sciences, Ranchi. The results of this study suggest that serum cystatin C measurement is a useful, practical, non–invasive tool for the evaluation of diabetes kidney disease. Urine Albumin Creatinine Ratio (ACR) had significant positive correlation with Serum creatinine (r = 0.579, p < 0.001) and serum Cystatin (r = 0.662, p < 0.001) which mean as Urine ACR increases serum cystatin C increases more significantly than serum creatinine. Serum Cystatin C had significant inverse correlation with eGFR Creatinine(r = –0.484, p < 0.001) and eGFR Cystatin(r = –0.828, p < 0.001).