Background: Albuminuria is considered the gold standard of onset and progression of diabetic nephropathy (DN). Higher levels of serum insulin may decrease uric acid clearance by the kidneys leading to hyperuricemia, which has injurious effect on kidneys. The aim of this study is to evaluate the frequency and relationship of uric acid to different levels of albuminuria in type II diabetes mellitus. Patients and Method: This cohort study included 56 T2DM patients classified according to stages of DN into: Group I that including 12 patients with normoalbuminuria, group II included 26 patients with microalbuminuria, and group III including 18 patients with macroalbuminuria. All of them were evaluated for serum creatinine and albumin, CBC, ACR, UAE, HbA1c, ESR, Serum TSH and serum uric acid (SUA). Results: Hyperuricemia frequency was (62.5%) and it had highly statistical significant difference with albuminuria in the three studied groups. There was strong significant positive correlation of SUA with UAE (p < 0.014), Cr (p < 0.037), ACR (p < 0.006), HbA1c (p < 0.017) in macroalbuminuria and UAE (p< 0.043) in microalbuminuria group, and TLC (p < 0.024) in normoalbuminuria group. While there was a significant negative correlation between UA with albumin (p < 0.029) in macroalbuminuria group. Conclusions: Hyperinsulinemia and chronic inflammation associated with type IIDM leads to hyperuricemia, which had high frequency in our study (62.5%) and carry a hazardous effect on kidney function contributing to progressive increase of albuminuria. So, we must search for management of elevated UA in these patients to delay onset & progression of its morbidity.