Diabetic nephropathy (DN) is the major cause of end-stage kidney disease, but early biomarkers of DN risk are limited. Herein we examine urinary IgG4 and Smad1 as additional early DN biomarkers. We recruited 815 patients with type 2 diabetes; 554 patients fulfilled the criteria of an estimated glomerular filtration rate (eGFR) >60 mL/min and no macroalbuminuria at baseline, with follow-up for 5 years. Patients without macroalbuminuria were also recruited for renal biopsies. Urinary IgG4 and Smad1 were determined by enzyme-linked immunoassays using specific antibodies. The specificity, sensitivity, and reproducibility were confirmed for each assay. Increased urinary IgG4 was significantly associated with lower eGFR. The level of urinary IgG4 also significantly correlated with surface density of peripheral glomerular basement membrane (Sv PGBM/Glom), whereas Smad1 was associated with the degree of mesangial expansion-both classic pathological findings in DN. Baseline eGFR did not differ between any groups; however, increases in both urinary IgG4 and Smad1 levels at baseline significantly predicted later development of eGFR decline in patients without macroalbuminuria. These data suggest that urinary IgG4 and Smad1 at relatively early stages of DN reflect underlying DN lesions and are relevant to later clinical outcomes.