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The results of recent clinical trials in early diabetic nephropathy demonstrate that current therapies designed to suppress microalbuminuria do not prevent renal function decline. However, recent observational studies refined the traditional model of early nephropathy in type 1 diabetes and may inform more effective therapies for the prevention of chronic kidney disease.A contemporary model of early nephropathy in type 1 diabetes has emerged in which initiation of renal function decline occurs soon after the onset of microalbuminuria and is not conditional on progression to proteinuria. Early renal function decline can be diagnosed using serial measurement of serum cystatin C. Abnormal levels of markers of protein glycation, uric acid metabolism, and chronic inflammation appear to represent mechanisms unique to early renal function decline and distinct from those involved in microalbuminuria.Recent findings refine the existing paradigm of early nephropathy in type 1 diabetes and have significant implications for research. Clinical tests – such as an algorithm for the serial determination of serum cystatin C – should be developed for monitoring early renal function decline for use as an outcome in clinical trials.