OBJECTIVE To assess the association between 2-year changes in urine albumin-to-creatinine ratio (UACR) and the risk of clinical outcomes in type 2 diabetes. RESEARCH DESIGN AND METHODS We analyzed data from 8,766 participants in the Action in Diabetes and Vascular Disease: Preterax and Diamicron MR Controlled Evaluation Post-Trial Observational Study (ADVANCE-ON). Change in UACR was calculated from UACR measurements 2 years apart, classified into three groups: Decrease in UACR of ≥30%, minor change, and increase in UACR of ≥30%. By analyzing changes from baseline UACR groups, categorized into thirds, we repeated these analyses accounting for regression to the mean (RtM). The primary outcome was the composite of major macrovascular events, renal events, and all-cause mortality; secondary outcomes were these components. Cox regression models were used to estimate hazard ratios (HRs). RESULTS Over a median follow-up of 7.7 years, 2,191 primary outcomes were observed. Increases in UACR over 2 years independently predicted a greater risk of the primary outcome (HR for ≥30% UACR increase vs. minor change: 1.26; 95% CI 1.13-1.41), whereas a decrease inUACRwas not significantly associatedwith lower risk (HR 0.93; 95% CI 0.83-1.04). However, after allowing for RtM, the effect of "real" decrease in UACR on the primary outcome was found to be significant (HR 0.84; 95% CI 0.75- 0.94), whereas the estimated effect on an increase was unchanged. CONCLUSIONS Changes in UACR predicted changes in the risk of major clinical outcomes and mortality in type 2 diabetes, supporting the prognostic utility of monitoring albuminuria change over time.