We investigated the interaction of MTHFR C677T polymorphism (rs1801133) with smoking in susceptibility to diabetic nephropathy (DN) in Chinese men with type 2 diabetes mellitus (T2DM). We studied 655 Chinese men with T2DM, who were divided into two groups (321 with DN and 334 without DN). The genotype of MTHFR C677T polymorphism was detected by real-time polymerase chain reaction. MTHFR TT genotype carried a higher risk of DN compared with the CC genotype (OR = 2.05; P = 0.002). The T allele showed marked association with DN development in patients who smoked, using additive, recessive, and dominant models (OR = 1.60, 1.83, and 1.88, respectively; P = 0.006, 0.002, and 0.04, respectively), which was not observed in the nonsmoking group. Patients with TT and CT genotypes, who smoked had a higher risk of DN compared with the control group (non-smoking with CC genotype; OR = 3.73 and 2.28, respectively; P < 0.001 and P = 0.004, respectively), whereas the other groups were not observed. In conclusion, the T allele of rs1801133 may be a risk factor for DN in Chinese men with T2DM, and synergy appears to exist between the MTHFR rs1801133 and smoking in susceptibility to DN.