Epidemiological studies suggest the existence of a genetic susceptibility to the development of diabetic nephropathy. The apolipoprotein E gene (APOE), which is well known to have a polymorphism (ε2, ε3, and ε4) in exon 4, has been considered a candidate gene susceptible to this complication, because this variation was reportedly involved in lipid metabolism. To date, numerous case-control studies in patients with type 1 and type 2 diabetes have been reported. Although the ε2 allele of the APOE polymorphism tends to be associated with an increased risk for diabetic nephropathy, the results of these case-control comparisons are conflicting. However, a family-based study (the transmission/disequilibrium test) provided strong evidence that the ε2 allele was preferentially transmitted to patients with diabetic nephropathy but not transmitted to those without it. Several prospective follow-up studies also reported an increased risk for progression to higher stages of diabetic nephropathy for the ε2 carriers. Furthermore, two recent meta-analyses reported that the ε2 allele is associated with a risk for diabetic nephropathy. Based on the results of these studies, the ε2 allele of the APOE polymorphism seems to be a genetic risk factor for diabetic nephropathy susceptibility. However, this genetic effect only accounts for a small proportion of this complication, and the mechanism remains unclear at present. Further studies are needed to explore whether genotyping of the APOE polymorphism in patients with diabetes is of value for better management in clinical practice.