Reduced renal insulin signalling is implicated in the pathogenesis of albuminuria. We sought to investigate whether insulin action and secretion, measured before diabetes onset, are associated with the development of albuminuria after diabetes onset. Baseline body composition, insulin sensitivity by hyperinsulinaemic-euglycaemic clamp at submaximal and maximal insulin stimulation (240 and 2400 pmol/m2/min; M-low and M-high), and insulin secretion by intravenous glucose tolerance test [acute insulin response (AIR)] were measured in 170 Southwestern Indigenous American adults who subsequently developed diabetes. After diabetes onset and during the median follow-up of 13.6 years, 81 participants (48%) developed albuminuria (urine albumin-to-creatinine ratio ≥30 mg/g). Separate associations of M-low, M-high and AIR (per 1-SD change) with the risk of albuminuria were assessed by Cox regression models adjusted for age, sex and body fat (%). Participants who developed albuminuria were of similar age (26.4 ± 5.4 vs. 27.5 ± 6.1 years), sex (46% vs. 48% male), body fat (36.4 ± 7.5 vs. 35.7 ± 7.9%) and AIR [2.3 ± 0.3 vs. 2.3 ± 0.3, pmol/L (log)] as those who did not develop albuminuria but had lower insulin sensitivity [M-low: 0.33 ± 0.08 vs. 0.36 ± 0.12, p = .03; M-high: 0.87 ± 0.11 vs. 0.91 ± 0.12, p = .02; mg/kg-metabolic body size/min (log)]. In separate adjusted models, lower M-low and M-high were both associated with an increased risk for albuminuria [hazard ratio (HR) 1.51, 95% confidence interval (CI) 1.14, 2.00, p = .004; HR 1.31, 95% CI 1.06, 1.63, p = .01), whereas AIR was not (HR 1.15, 95% CI 0.87, 1.56, p = .3). Lower insulin sensitivity is associated with the development of albuminuria, suggesting a role for insulin signalling in the pathogenesis of proteinuria.