The objective of this retrospective cohort study was to develop and validate the prediction equation of the annual glomerular filtration rate (GFR) decline in type 2 diabetic patients with preserved kidney function (GFR not less than 60 mL/min/1.73 m^2) who came to see physician at outpatient clinics of Maharajnakhonsithammarat Hospital during January 2007 to December 2008. A total of 1,338 patients were divided into 2 groups: equation development group (N=1,000) and equation validation group (N=338). Clinical and biochemical data were obtained from medical records. Stepwise multiple regression analysis (MRA) was performed to determine the prediction equation of the annual GFR decline. In development group, the range of baseline GFR was 66.67-157.19 mL/min/1.73 m^2 per year. Age and GFR were identified to be the baseline predictors of annual GFR decline (adjusted R^2 = 0.48) and Beta = 0.59 and 0.63, respectively (P<0.001 for both predictors). The prediction equation was: annual GFR decline (ml/min/1.73 m^2 per year) = 0.14 (Age, in years) + 0.03 (baseline GFR, in ml/min/1.73 m^2) – 7.48. Validation of the prediction equation revealed that this equation had approximated 10% typical bias and high precision (r^2=0.74).