Background <p>Diabetes, including diabetic nephropathy (DNP), seriously threatens human health. Endocrine dysfunction can lead to diabetes and thyroid diseases, which can also influence each other. Even slight changes in thyroid hormone levels, even when normal, can spark T2DM in those with prediabetes. This study aimed to evaluate the prevalence of hypothyroidism in patients with type-2 diabetes mellitus and its association with diabetic nephropathy.</p> Subject and Methods <p>A cross-sectional study was performed, and the subjects were selected from Paschim Midnapore and Jhargram districts, West Bengal. T2DM patients were diagnosed based on the standard criteria. A total of 171 individuals aged between 30 and 70 years of both sexes were screened for this study and divided them primarily into two groups T2DM patients with and without nephropathy, while a non-diabetic CKD group was used as a secondary comparison. Laboratory assessment was conducted for fasting and post-prandial sugar, HbA1c, FT3, FT4, and TSH of T2DM patients. To assess the diabetic nephropathy, serum creatinine and UACR were measured.</p> Results <p>Results found a positive correlation between TSH, HbA1c, and creatinine. The elevated concentration of TSH was positively associated with both HbA1c and serum creatinine. These findings suggest a strong relationship between thyroid dysfunction and the severity of DNP markers in this population. Conversely, creatinine and UACR levels were significantly (<i>p</i> &lt; 0.001) increased in T2DM with DNP, and this is associated with 30% Sc-hypo patients.</p> Conclusion <p>This study revealed a significant association between Sc-hypo and DNP in patients with T2DM. Therefore, this investigation will help in the early diagnosis of thyroid dysfunction, particularly Sc-hypo in T2DM patients, to potentially mitigate the progression of diabetic nephropathy.</p>