Background Microalbuminuria (MA) is an important clinical marker for the early detection of kidney damage in patients with type 2 diabetes (T2DM). Urine albumin-to-creatinine ratio (ACR), also known as urine microalbumin, is a sign of diabetic nephropathy (DN), which is a prevalent complication of diabetes and can result in end-stage renal disease (ESRD) if not managed. The prevalence of MA in T2DM has been steadily increasing worldwide, making it a significant public health concern. The goal of this study was to estimate the prevalence of MA and its relationship to hypertension and other diabetic complications among people with T2DM. Methodology This descriptive cross-sectional study was conducted from February 5, 2022, to February 10, 2023, to analyse data from T2DM patients who visited the outpatient diabetic clinic of Sheikh Zayed Medical College and Hospital, Rahim Yar Khan, Pakistan. This study included a total of 640 patients, aged 35-60 years, who had been diagnosed with T2DM for at least five years and fulfilled the inclusion criteria. Data on demographic and clinical characteristics, blood pressure (BP) measurements, and laboratory investigations were collected. MA was assessed based on the ACR in a spot urine sample of more than 30 mg/l. Blood pressure greater than 140/90 or already taking anti-hypertensives was taken to constitute hypertension. Factors associated with MA like hypertension, gender, mode of diabetes treatment, duration of diabetes, glycosylated haemoglobin (HbA1c), dyslipidemia, and other diabetic complications such as retinopathy and neuropathy were also recorded. Results The prevalence of MA in this study of T2DM patients study was 39.1%. The mean age of the participants with MA was 53.9 with a standard deviation (SD) of 6.1 years, and the mean duration of diabetes was 10.1 years (SD 6.2 years); 101 (33.4%) males (n=302) and 103 (30.5%) females (n=338) had MA. There was a statistically significant correlation between MA > 30mg/d and hypertension (p = <0.001), diabetes duration since diagnosis (p=0.04), HbA1C level (p = <0.001), dyslipidemia (p=0.001), therapy type (p = <0.001), triglyceridemia (p = 0.03), history of diabetes retinopathy (p= <0.002), and peripheral neuropathy (p= <0.001). However, there was no statistically significant correlation between MA and age (p = 0.56), female gender (p = 0.08), low- and high-density lipids, or statin use (p = 0.06). Conclusion The prevalence of microalbuminuria among T2DM patients is significantly high (39.1%) and is positively correlated with various factors such as male gender, hypertension, suboptimal control of diabetes mellitus, high HbA1c levels, longer disease duration, dyslipidemia with high triglycerides,treatment modalities of T2DM, and other diabetic complications like neuropathy and retinopathy. As diabetes is very prevalent in our country, the number of patients with diabetic kidney disease will rise significantly in the near future, leading to ESRD and other diabetic complications, and immediate intervention is needed to prevent this. Further research is warranted to explore potential interventions and evaluate their impact on patient outcomes.