Purpose: To assess the effect of acarbose in lowering low-grade albuminuria compared to metformin in newly diagnosed Chinese type 2 diabetes (T2DM) patients. Patients and Methods: The Metformin and AcaRbose Clinical Trial was a randomized, open-label trial in newly diagnosed T2DM patients. Participants received 48 weeks of monotherapy with acarbose (100 mg three times a day) or metformin (1500 mg once a day). As the hypoglycemic effect of acarbose and metformin has been evaluated in previous reports. This analysis studied the effect of the two antidiabetic drugs on reducing urinary albumin. The percent change in the urinary albumin/creatinine ratio (uACR) from baseline to week 48 was analyzed, and ANCOVA was employed to establish whether the effect in decreasing uACR was mediated by metabolic improvement. Results: Acarbose reduced the adjusted mean percent uACR by -31.5% (95% confidence interval [CI] -48.4 to -7.5) compared with metformin. When adjusting for changes in glycated hemoglobin, body weight, systolic blood pressure and triglycerides or changes in area under the curve of glucagon-like peptide 1 (AUCGLP-1) in the standard meal test, the uACR-lowering effect was not attenuated. If stratified by eGFR, blood glucose level, sex or uACR level, the effect of acarbose versus metformin was consistent across subgroups. The proportion of patients with a reduction in uACR of at least 70% was 48.6% in the acarbose group and 34.1% in the metformin group. Conclusion: Acarbose lowered the uACR compared to metformin in newly diagnosed T2DM patients independent of improvements in hyperglycemia, blood pressure, body weight and triglycerides.