Background: Diabetes Mellitus (DM) and hypertension often coexist, exacerbating cardiovascular, renal, and hepatic complications. This study aims to explore the relationship between liver dysfunction and renal microvascular complications in Type 2 Diabetes Mellitus patients. Methods: A correlational study was conducted over 18 months with 200 patients diagnosed with Type 2 DM. Investigations included liver function tests, abdominal ultrasonography, and urine spot microalbumin. Data were analyzed using SPSS version 21.0. Results: The majority of patients were aged 61-70 years, with equal gender distribution. Elevated liver enzymes (SGOT, SGPT, ALP, GGTP) correlated significantly with longer diabetes duration and poor glycemic control. Increased BMI was associated with liver dysfunction. NAFLD prevalence was notable among the cohort. Discussion: Liver dysfunction was prevalent among Type 2 DM patients, significantly correlated with age, disease duration, and BMI. Elevated GGT levels reflected oxidative stress and hepatobiliary damage, aligning with existing literature. The study underscores the importance of monitoring liver function to manage diabetes complications effectively. Conclusion: Elevated liver enzymes in Type 2 DM patients are linked with prolonged disease duration, poor glycemic control, and increased BMI. The findings highlight the need for comprehensive liver function monitoring in diabetic management. Limitations include a small sample size and lack of lifestyle factor analysis. Future research should involve larger, multi-center studies to validate these findings.