Background Depression is frequent in people with diabetes mellitus, particularly in those with microvascular complications, as diabetic nephropathy is. Objective To realise a two years prospective study in T2DM patients with diabetic nephropathy, in order to explore the impact of depression in them. Methods and materials A prospective, observational study was realised at a hospital and two diagnostic centers in Tirana. 110 patients (55 males and 55 females) with T2DM, aged ≥ 20 years were enrolled in 2008. Exclusion criteria were personal and familial history for mental illness. For each patient were prescribed: gender, age, duration of diabetes, oldness of diabetic nephropathy, blood glucose level, HbA1c level, UAE level, education and nature of work. The evaluation of depression was done according to Hamilton Depression Scale, by psychiatrists. Results 83% of the studied cases with diabetic nephropathy resulted with a level of depression. 39% of them result with mild depression, 31% with moderate depression, 21% with severe depression and 9% with very severe depression. Depression was strongly associated with age, male gender, HbA1c levels, UAE rate, duration of diabetic nephropathy, the presence of diabetic retinopathy and diabetic foot disease, education level and mental work. However, the likelihood of depression was not significant with duration of diabetes and insulin use. Conclusions This study showed high prevalence of depression in type 2 diabetic patients with diabetic nephropathy. So, the management of chronic complications of diabetes is important for the depression prevention in type 2 DM patients.