Diabetic nephropathy (DN) is a major complication in diabetic patients. Microalbuminuria testing is used to identify renal disease; however, its predictive value is questionable. We aimed to identify urinary biomarkers to early diagnosis nephropathy before identifiable alternations in kidney function or urine albumin excretion occurs. Proteomic approaches were used to identify potential urinary biomarkers and enzyme-linked immunosorbent assay was performed to verify the results. The data identified haptoglobin (HPT) and α-1-microglobulin/bikunin precursor (AMBP) as two biomarkers with the highest ability to distinguish between healthy individuals and patients with nephropathy, and between diabetic patients with and without DN. Further, the HPT-to-creatinine ratio (HCR) was evaluated as an independent predictor of early renal functional decline (ERFD) in a cohort with an average follow-up of 4.2 years. The area under the curve (AUC) value for ERFD prediction was significantly improved when the HCR biomarker was included in the model with albumin to creatinine ratio (ACR) and baseline characteristics (AUC values were 0.803 and 0.759 for HCR and ACR, respectively; p value was 0.0423 for difference between models). In conclusion, our results suggest that HCR represents an early indicator of nephropathy, and a marker related to ERFD among diabetic patients in Taiwan.