Aims: We aimed to determine whether the presence of hepatic steatosis and/or non-alcoholic fatty liver disease was associated with decline in renal function or onset of microalbuminuria in a cohort of people with Type 2 diabetes, including those managed in both primary and secondary care. Methods: Nine hundred and thirty-three patients from the Edinburgh Type 2 Diabetes Study, a cohort of Scottish men and women aged 60-74 years with Type 2 diabetes, underwent assessment for hepatic steatosis by liver ultrasonography 1 year after recruitment. Non-alcoholic fatty liver disease was defined as the presence of steatosis following exclusion of secondary causes of liver disease. Patients were followed for 4 years and decline in renal function was assessed by the change in estimated glomerular filtration rate over time. Results: Of the 933 subjects, 530 had hepatic steatosis and, of those with hepatic steatosis, 388 had non-alcoholic fatty liver disease. Neither hepatic steatosis nor non-alcoholic fatty liver disease were significantly associated with rate of decline in renal function, with the mean rate of decline in estimated glomerular filtration rate being -1.55 ml min-1 1.73 m-2 per year for participants with hepatic steatosis compared with -1.84 ml min-1 1.73 m-2 for those without steatosis (P = 0.19). Similar results were obtained when the analysis was restricted to participants with and without non-alcoholic fatty liver disease (-1.44 vs. -1.64 ml min-1 1.73 m-2 per year, respectively; P = 0.44). Additionally, neither hepatic steatosis nor non-alcoholic fatty liver disease were associated with the onset or regression of albuminuria during follow-up (all P ≥ 0.05). Conclusions: The presence of hepatic steatosis/non-alcoholic fatty liver disease was not associated with decline in renal function during a 4-year follow-up in our cohort of older people with Type 2 diabetes.