Background: YKL-40 is an inflammatory marker, a positive association between elevated circulating YKL-40 levels and increasing levels of albuminuria, which have been described in patients with type 1 and type 2 diabetes indicating a role of YKL-40 in the progressing vascular damage resulting in microvascular disease. Objectives: To assess serum YKL-40 as an early diagnostic marker of diabetic nephropathy in type 2 diabetes mellitus. Patients and Methods: 70 patients with type 2 diabetes mellitus (46 males and 24 females) were included in this study, another 19 healthy volunteers (12 males and 7 females) were chosen as a control group (group I). Patients were further classified according to their Albumin/creatinine ratio into three groups: group II; Diabetic normoalbuminuric, group III; Diabetic microalbuminuric and group IV; Diabetic macroalbuminuric. All subjects (patients and controls) participating in the study were subjected to full history and clinical examination and routine laboratory investigations and also specific laboratory investigations include glycated hemoglobin (HbA1c), urine creatinine, microalbumin, albumin creatinine ratio, and serum YKL 40. Results: The present study showed that serum YKL-40 significantly increased in diabetic patients than in the control group. In addition, there was a significant increase of YKL-40 in the macroalbuminuric group compared to the normoalbuminuric group and microalbuminuric group and a significant increase of YKL-40 in a microalbuminuric group compared to the normoalbuminuric group. Conclusion: The serum levels of YKL-40 in type 2 DM were significantly higher than in normal patients, and its level increased with increasing urinary albumin excretion rate.