OBJECTIVE Cross-sectional studies found less microalbuminuria in type 2 diabetic patients with the Ala12 allele of the peroxisome proliferator–activated receptor-γ2 (PPAR-γ2) Pro12Ala polymorphism. We prospectively evaluated the association between Pro12Ala polymorphism (rs1801282) and new-onset microalbuminuria. RESEARCH DESIGN AND METHODS Pro12Ala polymorphism was genotyped by TaqMan-based assay in genomic DNA of 1,119 consenting patients from BErgamo NEphrologic DIabetic Complications Trial (BENEDICT)—a prospective, randomized trial evaluating ACE inhibition effect on new-onset microalbuminuria (albuminuria 20–200 μg/min in at least two of three consecutive overnight urine collections in two consecutive visits) in hypertensive type 2 diabetes with albuminuria <20 μg/min at inclusion. RESULTS Baseline characteristics of Ala (Ala/Ala or Ala/Pro) carriers and Pro/Pro homozygotes were similar, with a nonsignificant trend to lower albuminuria (P = 0.1107) in the 177 Ala carriers. Over a median (interquartile range) of 44.0 (17.1–51.9) months, 7 (4%) Ala carriers and 86 (9.1%) Pro/Pro homozygotes developed microalbuminuria (hazard ratio [HR] 0.45 [95% CI 0.21–0.97]; P = 0.042). Final albuminuria was significantly lower in Ala carriers than Pro/Pro homozygotes (7.3 ± 9.1 vs. 10.5 ± 24.9 μg/min, respectively), even after adjustment for baseline albuminuria (P = 0.048). Baseline and follow-up blood pressure and metabolic control were similar in both groups. Incidence of microalbuminuria was significantly decreased by ACE versus non-ACE inhibitor therapy in Pro/Pro homozygotes (6.3 vs. 11.9%, respectively, HR 0.46 [0.29–0.72]; P < 0.001). CONCLUSIONS In type 2 diabetes, the Ala allele protects from worsening albuminuria and new-onset microalbuminuria, and ACE inhibition blunts the excess risk of microalbuminuria associated with the Pro/Pro genotype. Evaluating Pro12Ala polymorphism may help identifying patients at risk who may benefit the most from early renoprotective therapy.