The development of kidney disease in diabetes mellitus can be viewed as a two-stage process: (1) the development of proteinuria, and (2) its progression to chronic renal failure. Determinants of the latter were examined in 439 IDDM patients who had nephropathy and participated in the Diabetic Retinopathy Study. Using serum creatinine levels obtained during the follow-up period to assess the rate of loss of renal function, we found that only one-third of these patients experienced a rapid loss of function, while the others had slowly declining or unchanging renal function despite the presence of proteinuria and severe diabetic retinopathy. Among the many baseline variables examined, only elevated cholesterol and elevated systemic blood pressure were predictors of a rapid loss of renal function. Patients with this rapid loss of renal function also had the highest risk of death due to cardiovascular causes, as well as all causes. Once again, hypercholesterolemia was the major predictor of these deaths. In conclusion, efforts should be undertaken early to identify patients who are rapidly losing renal function so that interventions to modify systemic blood pressure and hypercholesterolemia may prevent or postpone the development of renal failure and death in patients with IDDM.