Osteoglycin (OGN) could be a biomarker of mild kidney function impairment in type 2 diabetes (T2D). Our study aimed to determine the association between serum OGN and impaired kidney function risk in T2D patients and to analyze its potential role as an estimator of kidney disturbances in this population. This cross-sectional study included 147 T2D patients (65 ± 8 years, 58.5% males), and 75 healthy controls (63 ± 10 years, 36% males). Circulating OGN levels were determined by ELISA. Linear regression modeling was performed to determine the variables influencing circulating OGN, and an ROC curve was plotted to assess the usefulness of OGN as an estimator of diabetic kidney disease risk. Circulating OGN was significantly increased in T2D patients compared to controls (18.41 (14.45–23.27) ng/mL vs. 8.74 (7.03–12.35) ng/mL; p < 0.001). We found a progressive increase in serum OGN according to the severity of kidney impairment in T2D patients (normal kidney function: 16.14 (12.13–20.48) ng/mL; mildly impaired kidney function: 19.15 (15.78–25.90) ng/mL; moderate impaired kidney function: 21.80 (15.06–29.22) ng/mL; p = 0.006). Circulating OGN was an independent estimator of mildly impaired kidney function risk in T2D patients. We suggest that serum OGN could act as an albuminuria-independent biomarker of incipient kidney dysfunction in T2D patients.