The objective of this study is to investigate the possible association between heparanase activity and diabetic and renal biomarkers to evaluate heparanase as a predictor of diabetic nephropathy in type 2 Egyptian diabetic patients. Eighty four volunteers were classified as follows: group I comprised 28 normal subjects, group II consisted of 28 type 2 diabetic patients with normoalbuminuria, and group III consisted of 28 type 2 diabetic patients with microalbuminuria. Heparanase activity in the urine and serum, diabetic biomarkers, and renal function tests were determined. Type 2 diabetic patients with normoalbuminuria exhibited a significant increase in serum heparanase activity (39.19 %); this increase was augmented in patients with microalbuminuria (122.2 %), compared to normal control. Elevation in serum heparanase activity was parallel with the levels of diabetic biomarkers. Urinary heparanase activity showed a significant increase in the type 2 diabetic patients with normoalbuminuria (49.14 %), while kidney function biomarkers were insignificantly changed with exception to a significant decrease in urinary creatinine (14.24 %), compared to normal control. On the other hand, diabetic patients with microalbuminuria showed a dramatic increase in urinary heparanase activity with a significant increase in all kidney function biomarkers, together with a highly significant decrease in creatinine and estimated glomerular filtration rate (eGFR) compared to those with normoalbuminuria. Significant positive correlation between serum heparanase activity and plasma glucose, insulin, and homeostasis model assessment for insulin resistance (HOMA-IR) as well as urinary heparanase activity and albuminuria was reported. Also, a significantly negative correlation was found between urinary heparanase and urinary creatinine and eGFR. Heparanase activity may serve as a potential predictor for diabetic nephropathy in type 2 diabetic patients with uncontrolled glucose tolerance. Therefore, the use of heparanase for early diagnosis in addition to good glycemic control would be more effective in reducing the risk of diabetic renal complications.