Patients with diabetes mellitus (DM) are at risk of developing diabetic nephropathy (DN), a condition whose onset and progression are linked to increased morbidity and mortality. Therefore, early recognition is crucial. Presently, this relies on the albumin excretion rate (AER) and glomerular filtration rate (GFR). Nevertheless, DN eventually affects patients with normal AER and GFR. Thus, further easy-to-handle biomarkers of DN onset/worsening are needed. Liver-type fatty acid-binding protein (L-FABP) has been associated with renal damage and could help predict/diagnose DN. We performed a literature selection to evaluate the performance of urinary excretion of such biomarker (urinary-L-FABP:uL-FABP) in predicting/diagnosing DN and its progression in diabetes. We evaluated 635 publications, 21 of which were included. Of these, 14 have cross-sectional design/arms and ten longitudinal design/arms. Cross-sectional studies showed uL-FABP to correlate with DN onset and severity in type-1 DM and type-2 DM, besides being higher than in healthy controls in the case of normoalbuminuria. Longitudinal studies showed baseline uL-FABP to predict DN onset in normoalbuminuric patients with T1DM and DN progression independently of diabetes type. The results suggest that uL-FABP is a marker of tubular damage detectable before increased albumin excretion and can represent the earliest sign of DN. Indeed, it discloses its onset and often predicts its severity in T2DM and patients with T1DM. Currently, uL-FABP can be routinely assessed and, being available as a point-of-care fast-test kit, may also become an easy-to-handle diagnostic tool for outpatients. In conclusion, uL-FABP represents a user-friendly biomarker of DN and can even predict DN progression in T2DM and T1DM over time.