OBJECTIVE: To evaluate baseline predictors for the development of persistent microalbuminuria and macroalbuminuria prospectively in patients with type 1 diabetes. DESIGN: Prospective observational study of an inception cohort. SETTING: Outpatient diabetic clinic in a tertiary referral centre, Gentofte, Denmark. PARTICIPANTS: 286 patients (216 adults) newly diagnosed with type 1 diabetes consecutively admitted to the clinic between 1 September 1979 and 31 August 1984. MAIN OUTCOME MEASURES: Persistent microalbuminuria and persistent macroalbuminuria. RESULTS: During the median follow up of 18.0 years (range 1.0-21.5 years), total of 4706 patient years of follow up, 79 of 277 (29%) patients developed persistent microalbuminuria. 27 of 79 progressed further to persistent macroalbuminuria. The cumulative incidence of persistent microalbuminuria and persistent macroalbuminuria was 33.6% (95% confidence interval 27.2% to 40.0%) and 14.6% (8.9% to 20.3%), respectively. Significant predictors for the development of persistent microalbuminuria were a 10-fold increase in urinary albumin excretion rate (relative risk 3.78, 1.57 to 9.13), being male (2.41, 1.43 to 4.06), a 10 mm Hg increase in mean arterial blood pressure (1.38, 1.20 to 1.57), a 1% increase in haemoglobin A1c (1.18, 1.04 to 1.32), and a 1 cm increase in height (0.96, 0.95 to 0.98). 28 patients with microalbuminuria (35%) regressed to normoalbuminuria either transiently (n = 15) or permanently (n = 13). CONCLUSIONS: Around one third of patients newly diagnosed with type 1 diabetes develop persistent microalbuminuria within the first 20 years of diabetes. Several potentially modifiable risk factors predict the development of persistent microalbuminaria and persistent macroalbuminuria.