Introduction. The insertion/deletion (I/D) polymorphism of the angiotensin-converting enzyme (ACE) gene has been shown to be associated with a number of complications of type 2 diabetes. Results on the development and progression of albuminuria, however, have remained controversial, with ethnic differences being a potential reason.The present study is the first report to examine Iranian patients. Methods. Patients (322; 162 males) with type 2 diabetes were categorised in this cross-sectional study into the following groups: normoalbuminuria (n=145), microalbuminuria (n=129) and macroalbuminuria (n=48).ACE gen I/D polymorphism genotypes were determined using the polymerase chain reaction method. Results. The distribution of ACE genotypes was significantly different among the groups (p<0.001), with the II genotype decreasing and the DD genotype increasing in frequency with increasing severity of albuminuria. Multivariate regression analysis showed that the ACE genotype did not change the odds of having microalbuminuria versus normoalbuminuria, while the D allele independently increased the odds of having macroalbuminuria versus microalbuminuria approximately threefold (p<0.01). Conclusions. In Iranian patients with type 2 diabetes, the D allele is associated with progression, but not development, of albuminuria.