The prevalence of microalbuminuria was assessed in 149 consecutive, newly-diagnosed and untreated patients with Type 2 diabetes, 129 of whom were followed up for 1 year, with at least three urine specimens being obtained during this period. At initial presentation, 39 (26%) patients had a urinary albumin to creatinine ratio (ACR) of greater than 2.5 mg mmol-1 and compared with patients who had a normal ACR, they were older (64 (11) (SD) vs 58 (11) yr, p less than 0.002), with higher random blood glucose (14.4 (4.5) vs 12.3 (4.4) mmol l-1, p less than 0.02) and glycosylated haemoglobin (13.0 (3.1) vs 11.3 (2.7)%, p less than 0.01) concentrations. An elevated ACR was also associated with a higher systolic blood pressure (149 (22) vs 140 (22), p less than 0.05) and the presence of macrovascular disease, particularly peripheral vascular disease (p less than 0.001), with this association persisting after adjustment for the effect of age. Ten patients reverted to normal albumin excretion on improving blood glucose control, this group having a significantly higher glycosylated haemoglobin concentration at initial presentation than the group with a persistently elevated ACR (14.4 (2.5) vs 12.0 (3.0)%, p less than 0.05). The 21 (16%) patients with a persistently elevated ACR from diagnosis of Type 2 diabetes were older than those with normal albumin excretion throughout (64 (7) vs 58 (10) yr, p less than 0.02) and it is probable that these patients have abnormal albumin excretion secondary to established renal pathology.