The aim of the current study was to examine the influence of interaction between polymorphisms of methylenetetrahydrofolate reductase (MTHFR) C677T and A1298C with angiotensin converting enzyme insertion/deletion (ACE I/D) polymorphism on the risk of diabetic nephropathy (DN). In a case control study using polymerase chain reaction (PCR)- and PCR-restriction fragment length polymorphism (RFLP), the presence of three polymorphisms in 140 patients with type 2 diabetes mellitus (T2DM) with nephropathy including patients with micro- and macro-albuminuria and 72 patients with normoalbuminuria from Western Iran were investigated. In the presence of both MTHFR 677 T and ACE D alleles, there was a trend toward increased risk of DN 2.68-fold (p=0.054). The possession of both MTHFR 677 T and ACE D alleles increased the risk of macro-albuminuria four times (p=0.035). The concomitant presence of both MTHFR 1298 C and ACE D alleles increased the risk of macro-albuminuria 7.8-fold (p=0.012). In addition, the risk of progression from micro- to macro-albuminuria in the presence of both alleles tended to be increased (4.1-fold, p=0.09). Our study for the first time demonstrated a synergistic effect between ACE I/D with either MTHFR C677T or A1298C polymorphism on the increased risk of DN among patients with T2DM. We found that MTHFR 1298 C strongly interacts with the ACE D allele and augments the risk of DN in our population.