The aim of our study was to investigate an association between polymorphisms of either the VEGF (vascular endothelial growth factor) gene (rs6921438) or the KDR (kinase insert domain receptor) gene (rs2071559, rs2305948) and DN (diabetic nephropathy) in Caucasians with T2DM (type 2 diabetes mellitus). The second aim was to investigate the effect of either the VEGF gene (rs6921438) or the KDR gene (rs2071559, rs2305948) on the immune expression of either VEGF or KDR in the renal tissues of T2DM subjects (to test the functional significance of tested polymorphisms). The study included 897 Caucasians with T2DM for at least ten years (344 patients with DN and 553 patients without DN). Each subject was genotyped and analyzed for KDR (rs1617640, rs2305948) and VEGF (rs6921438) polymorphisms. Kidney tissue samples taken from 15 subjects with T2DM (autopsy material) were immunohistochemically stained for the expression of VEGF and KDR. We found that the rs2071559 KDR gene was associated with an increased risk of DN. In addition, the GG genotype of the rs6921438 VEGF gene had a protective effect. We found a significantly higher numerical area density of VEGF-positive cells in T2DM subjects with the A allele of the rs6921438-VEGF compared to the homozygotes for wild type G allele (7.0 ± 2.4/0.1 mm2 vs. 1.24 ± 0.5/0.1 mm2, respectively; p < 0.001). Moreover, a significantly higher numerical area density of KDR-positive cells was found in T2DM subjects with the C allele of rs2071559 (CC + CT genotypes) compared to the homozygotes for wild type T allele (9.7± 3.2/0.1 mm2 vs. 1.14 ± 0.5/0.1 mm2, respectively; p < 0.001) To conclude, our study showed that the presence of the C allele of the rs2071559 KDR gene was associated with a higher risk of DN, while the G allele of the rs6921438-VEGF conferred protection against DN in Slovenian T2DM subjects.