The goal of this study was to examine the association between known polymorphisms in the apolipoprotein E gene (APOE) and diabetic nephropathy (DN) in type 1 diabetes. We used both a case-control comparison and a family-based study design known as the transmission/disequilibrium test (TDT). For the case-control comparison, we collected DNA from 223 subjects with clinically diagnosed DN and 196 control subjects with normoalbuminuria and long-duration type 1 diabetes (> or = 15 years). For the family-based study, we obtained DNA from both parents of 154 DN subjects and 81 control subjects. The frequency of the epsilon2 allele of exon 4 of APOE was significantly higher in DN subjects than in control subjects. The risk of DN was 3.1 times higher (95% CI 1.6-5.9) in carriers of this allele than in noncarriers. In the family study, heterozygous parents for the E2 allele preferentially transmitted epsilon2 to DN offspring (64 vs. 36%, P < 0.03). Four additional polymorphisms (i.e., -491 A/T, -219 G/T, IE1 G/C, and APOCI insertion/deletion [I/D]) that flank the APOE locus were not associated with DN in either the case-control comparison or in the family-based study. In conclusion, the results of the case-control as well as the family-based study provide evidence that the epsilon2 allele of APOE increases the risk of DN in type 1 diabetes. The molecular mechanisms underlying this risk are unclear at present.