Point mutations in methylenetetrahydrofolate reductase (MTHFR) and hyperhomocysteinemia were implicated in the pathogenesis of diabetic nephropathy (DN) in many ethnic groups. This study addressed the association of C677T and A1298C single nucleotide polymorphisms (SNPs) of MTHFR gene with DN in Tunisian type 2 diabetes (T2DM) patients. Study subjects comprised 93 DN patients, 267 patients with normoalbuminuria, and 400 control subjects. C677T and A1298C genotypes were determined by PCR-RFLP analysis, and homocysteine levels were measured by ELISA. A1298C and C677T were highly prevalent among T2DM patients, with allele frequencies of 0.26 and 0.36, respectively. Higher mutant 677T allele and 677C/T and 677T/T genotypes of C677T SNP, but not A1298C SNP, together with 677C/1298A, 677C/1298C, and 677T/1298A haplotypes were seen in DN patients compared to normoalbuminuric patients, (p<0.001). Plasma homocysteine was positively associated with MTHFR 677T/T genotype among the three groups, and was significantly elevated in double heterozygous DN patients but not in normoalbuminuric patients or controls. Logistic regression analysis with DN as dependent variable showed that homocysteine (OR, 1.153) and MTHFR 677T/T (OR, 9.799) were the only variables associated with DN, after adjusting for possible confounding variables. C677T, but not A1298C, SNP, is a risk factor for DN, presumably acting by elevating homocysteine levels.