Objective: To compare the effect of Spironolactone with Telmisartan in reducing microalbuminuria in normotensive patients of diabetic nephropathy. Methods: This was an open labelled ,prospective and randomized control study. Diabetic patients of either sex, age 25 to 75 years, Hb1Ac≤8% and Random urinary albumin to creatinine ratio of 30-300mg/gr Cr were included in the study. Consenting patients were screened for eligibility. A total number of 110 patients were included after taking informed consent in the study. The patients were divided into two groups using computer generated random table. Group 1 received Spironolactone(25 mg once a day ); Group 2 received Telmisartan (40 mg once a day). A detailed history and thorough clinical examination was done for each case. Specific emphasis was given on the treatment and family history as well as life style modifications followed by the patients as instructed by the doctor. Results: There was insignificant decrease in SBP and DBP in Group 1 and significant decrease in Group 2. There was no significant (p>0.05) difference in urinary albumin to creatinine ratio at all the time intervals between the groups.There was significant decrease in urinary albumin creatinine ratio in both groups during six month treatment.(p=0.0001). The sodium was found to be significantly (p=0.001) different at 4 week between the groups. No significant effect of time X group interaction in the change in urinary albumin to creatinine ratio and HbA1C. Conclusion The study concludes that Spironolactone can be recommended as an alternative treatment for patients with diabetes and early nephropathy when the risk of hyperkalemia with spironolactone is minimal. The reduction in urinary albumin creatinine ratio in Spironolactone was independent of reduction in systolic blood pressure and Diastolic blood pressure.