The aim of present study was to determine if factor V Leiden (FVL) mutation and angiotensin converting enzyme insertion/deletion (ACE I/D) polymorphism are associated with diabetic nephropathy (DN) among Kurdish population from Western Iran. This case-control study comprised 144 unrelated adult type 2 diabetic mellitus patients (T2DM) including 72 patients with microalbuminuria and 72 age and sex matched patients without nephropathy. The ACE I/D polymorphism and FVL mutation were detected by polymerase chain reaction (PCR) and PCR-RFLP, respectively. The frequency of FVL G1691A and ACE D allele in T2DM patients with microalbuminuria were 1.6 and 57%, respectively and in normoalbuminuric T2DM patients were 4.9 and 58.3%, respectively (P > 0.05). ACE genotypes affected on serum ACE activity and a better response to ACE inhibitor therapy (captopril) compared to angiotensin II receptor antagonist (losartan) was obtained with significant reduction of ACE activity in diabetic patients without nephropathy carrying DD genotype. However, the beneficial effect of losartan therapy was observed in microalbuminuric patients with II genotype compared to ID and DD genotypes.