Patients with type 2 diabetes (T2DM) are usually obese and concurrent obesity results into activation of the renin-angiotensin-system (RAS) which is a risk factor for diabetic nephropathy (DN). Gene-gene interaction between acetyl-coenzymeA carboxylase beta (ACACβ) gene, which is involved in fatty acid metabolism and angiotensin II receptors (AGTR1) gene, which mediates RAS proteins actions on renal tissue, polymorphism with DN have not been studied earlier. The present study was designed with the aim to examine the association of an ACACβ (rs2268388) and AGTR1 (rs5186) gene polymorphism with the risk of DN in Asian Indians. 1,158 patients with T2DM belonging to two independently ascertained North Indian and one South Indian cohorts were genotyped for ACACβ (rs2268388) and AGTR1 (rs5186) polymorphism using real time PCR-based Taq-man assay and PCR-RFLP assays. In all the three cohorts, a significantly higher frequency of T allele and TT genotypes of ACACβ and C allele and CC genotypes of AGTR1 were found in patients with DN as compared to patients without nephropathy. Further, T allele of ACACβ and C allele of AGTR1 were found to be significantly associated with proteinuria, a hallmark of DN. We also found significant epistatic interactions between these two genes. TT genotypes of ACACβ gene and CC genotype of AGTR1 gene confers the risk of DN and both genes had significant epistatic interaction in Asian Indian patients with T2DM.