Background Several studies have examined serum adiponectin concentrations in prediabetes, newly diagnosed type 2 diabetes mellitus (T2DM), and other types of diabetes associated with the risk of T2DM and diabetic nephropathy (DN); however, the results to date are inconclusive. An aim of the current study is to determine whether adiponectin is a useful marker for the earlier development of T2DM and DN. Methodology This cross-sectional study included 400 subjects. Among the subjects, 100 were prediabetes subjects, 200 were T2DM patients, and the remaining 100 were healthy controls. The biochemical and clinical parameters of all patients were analyzed and the data were recorded. Results The mean levels of adiponectin were significantly lower in prediabetic subjects than in healthy controls (3.22 +/- 0.98, 5.36 +/- 2.24, p = 0.0001**). Furthermore, the levels of adiponectin were significantly higher in both the groups of T2DM patients when compared to healthy controls (19.85 +/- 3.31, 11.83 +/- 3.01, and 5.36 +/- 2.24, p = 0.0001**). In both diabetic groups, adiponectin was positively correlated with body mass index, glycated hemoglobin, insulin, homeostasis model assessment of insulin resistance, and microalbuminuria, while negatively correlated with estimated glomerular filtration rate. Interestingly, adiponectin had a reversed correlation in the prediabetic group. Conclusion Based on the results, the present study suggests that significantly decreased levels of serum adiponectin in prediabetic subjects might be used as a variable marker for T2DM. Moreover, adiponectin may useful for detecting the early onset of nephropathy, compared to microalbumin, as its concentration was significantly elevated in patients who were newly diagnosed with T2DM without nephropathy.