Abstract Background: Methylenetetrahydrofolate reductase (MTHFR) is a regulatory enzyme of homocysteine (Hcy) metabolism. Point mutation in MTHFR and hyperhomocysteinemia (HHcy) are implicated in the pathogenesis of diabetic nephropathy (DN) in many ethnic groups. The aim of this study is to find if MTHFR C677T polymorphism is a risk factor of DN in types 2 diabetes mellitus (T2DM) patients. Patients and methods: The MTHFR C677T polymorphism was detected in 100 T2DM patients by PCR-RFLP. They were divided into three groups; 38 patients with normoalbuminuria, 33 patients with microalbuminuria and 29 patients with macroalbuminuria. Serum levels of homocysteine were determined by nephelometry. Results: The presence of MTHFR 677T allele increases the risk of macroalbuminuria 3.3 folds (p=0.009) in T2DM patients. The presence of mutant genotypes CT and TT increase the risk of macroalbuminuria 3 folds (p=0.019). Serum levels of HCY were associated with C677T mutation (p=0.02), also there was significant association between high levels of HCY and DN (p=0.014). Conclusion: Methylenetetrahydrofolate reductase (MTHFR) C677T gene mutation was associated with increased risk for overt diabetic nephropathy in type 2 diabetic patients and had effect on serum levels of homocysteine.