INTRODUCTION: Diabetic nephropathy is a significant complication of diabetes and a leading cause of chronic kidney disease (CKD) globally. This study aimed to assess the decline of renal function and all-cause mortality and identify the contributing risk factors among Palestinian patients with diabetes. METHODOLOGY: The study employed a prospective cohort design, enrolling 311 patients with type 2 diabetes mellitus (T2DM) attending primary health care centers in Palestine. Baseline data were collected in 2018 to determine the prevalence of CKD in patients with T2DM. Subsequently, the patients were followed up for three years to assess renal function and identify significant associated risk factors. The primary outcomes examined were estimated glomerular filtration rate (eGFR) decline and all-cause mortality. RESULTS: During the three-year follow-up, 37.5% of the patients experienced eGFR decline, averaging 4.2 ml/min/1.73 m² per year. Males showed a significant association with eGFR decline with 5 times higher risk of developing eGFR decline. Hypertensive patients were 2.4 times more likely to experience decline. Regarding all-cause mortality, 14.1% of the patients died, with an incidence rate of 51.3 deaths per 1000 person-years. The risk of all-cause mortality was 5.5 times greater for patients with impaired renal function at baseline and 10.8 times greater for patients who had eGFR decline. CONCLUSION: This study highlights the importance of early detection of CKD in patients with diabetes, prompting more comprehensive management of risk factors related to eGFR decline and mortality. Furthermore, it underscores the need for future research in this patient population, including investigations about other relevant risk factors and the impact of different medications, such as anti-diabetic and antihypertensive medications, on the GFR decline and mortality rate.