Sarcopenia is associated with the risk of albuminuria in patients with type 2 diabetes mellitus (T2DM), and obesity is a risk factor for proteinuria. However, the association between sarcopenic obesity and diabetic nephropathy, including albuminuria, in patients with T2DM has not been reported. The study included 206 men and 163 women with T2DM who participated in the KAMOGAWA-DM cohort, which investigating the natural history of diabetes since 2014. Sarcopenia was defined as having both low skeletal muscle mass index (SMI, kg/m²) (<7.0 kg/m² for men and <5.7 kg/m² for women) and low handgrip strength (<28 kg for men and <18 kg for women). Obesity was diagnosed by the percentage of body fat (>30% for men and >35% for women). The patient was said to have sarcopenic obesity if he/she had both sarcopenia and obesity. Urinary albumin excretion of patients with sarcopenic obesity was higher than that of patients without sarcopenic obesity (median [interquartile range]: 342.0 [41.8–467.5] vs. 21.0 [9.0–75.4] mg/g Cr, p = 0.016). Additionally, sarcopenic obesity was associated with the presence of macroalbuminuria, compared with non-sarcopenic obesity (adjusted odds ratio 6.92 [95% confidence interval:1.63–29.4], p = 0.009). Adjusted odds ratios of sarcopenic obesity, sarcopenia only, and obesity only for the presence of macroalbuminuria were 6.52 (1.47–28.8, p = 0.014), 1.29 (0.45–3.71, p = 0.638), and 0.78 (0.38–1.58, p = 0.482), respectively, compared with neither sarcopenia nor obesity. This study indicated that sarcopenic obesity is associated with albuminuria, especially macroalbuminuria, in Japanese patients with T2DM.