The Pro12Ala polymorphism in the peroxisome proliferator-activated receptor-γ2 gene is suggested to associate with diabetic nephropathy and cardiovascular disease in type 2 diabetes. The aim of this study was to investigate the polymorphism in relation to diabetic nephropathy, end-stage renal disease (ESRD), mortality and cardiovascular (CVD) events in type 1 diabetic patients. This prospective observational follow-up study included 415 type 1 diabetic patients with overt diabetic nephropathy (252 men; age 42.2 ± 10.4 years [mean ± SD], duration of diabetes 28.3 ± 8.8 years, GFR 66 ± 8.8 ml/min) and 428 patients with longstanding type 1 diabetes and persistent normoalbuminuria (230 men; age 45.4 ± 11.6 years, duration of diabetes 27.8 ± 10.1 years). Follow-up: 8.1 (0.0-12.8) years (median [range]). There where no significant differences between cases and controls in genotype (p = 0.51) or allele frequencies (p = 0.25). Cox regression analysis revealed a covariate-adjusted hazard ratio (HR) for all-cause mortality in patients with the Ala/Ala genotype of 2.44 (1.23-4.84). The Pro12Ala polymorphism did not predict CVD events. However, the Ala/Ala genotype predicts ESRD (covariate-adjusted HR 2.60 (1.11-6.07)). Furthermore, Carriers of the Ala-allele had a higher rate of decline in GFR (p = 0.040). In conclusion, the Pro12Ala polymorphism is not associated with type 1 diabetic nephropathy. The Ala-allele is associated with enhanced decline in GFR and predicts ESRD and all-cause mortality in patients with nephropathy.