Abstract: Background: The association among serum osteoinductive factor (OIF) and diabetic nephropathy (DN) and its possible usage as a diagnostic marker for DN should be investigated. Subjects and methods: This study included a total of 60 type 1 diabetic patients divided to normoalbuminuria, microalbuminuria and macroalbuminuria groups , each group contained 20 patients in addition to 20 healthy control subjects. ELISA has examined serum OIF levels and checked other clinical biochemical parameters on the basis of standard methods. Results: The concentration of OIF in microalbuminuric and macroalbuminuric patients was substantially higher than in normoalbuminuric patients and control groups. The study showed significant positive correlation between serum OIF, DM duration, Creatinine and UACR but significantly negative correlated with eGFR and onset of diabetes. Conclusion: Our results indicated that OIF was demonstrated in early stages of DN in T1DM even before appearance of microalbuminuria and increased with progression of diabetic nephropathy. So OIF can be used as a biomarker for detection of DN in T1DM in microalbuminuric patients.