Background: Type 2 diabetes mellitus (DM) with nephropathy is a common complication in poorly controlled diabetes. Uncontrolled DM leads to intraglomerular vascular changes that cause physical injury to capillary walls, causing a profibrotic response in kidneys. The present study aimed to determine the association of hematological markers with microalbuminuria in early diabetic nephropathy.Methods: A single-center, cross-sectional study was conducted over the period of two years at the Department of Medicine of Pradyumna Bal Memorial Hospital, Kalinga Institute of Medical Sciences. A total of 90 patients diagnosed with type 2 DM were classified into two groups (group A and group B) according to microalbuminuria; there were 45 patients in each group. Levels of hematological markers, i.e., neutrophil-to-lymphocyte ratio (NLR) and red cell distribution width (RDW), between the study groups were examined and compared.Results: A significant difference in NLR was found between groups A and B (p = 0.001). A statistically significant difference in RDW was found between the groups (p = 0.015). Receiver operating characteristic curve analysis of inflammatory markers and microalbuminuria prediction showed an area under the curve of 0.814 for NLR and 0.656 for RDW.Conclusion: Hematological parameters like NLR and RDW are elevated in early diabetic nephropathy patients. NLR is found to be a better marker than RDW in predicting early nephropathy.