Background/Objective: Diabetic nephropathy (DN), a key microvascular complication of type 2 diabetes (T2DM), drives significant morbidity, mortality, and healthcare costs. Vitamin D deficiency has been linked to renal dysfunction, but its role in DN remains unclear. This study assessed the association between vitamin D status and DN versus T2DM without nephropathy. Methods: This cross-sectional hospital-based study included 399 participants (299 DN, 100 T2DM without nephropathy) at a tertiary endocrine clinic. Demographic, clinical, and biochemical data, including serum 25(OH)D, were collected. Chi-square and Mann–Whitney compared categorical and continuous variables, respectively, and multinomial logistic regression assessed the association between vitamin D status and DN (p < 0.05). Results: Patients with DN were older (58.2 ± 7.95 vs. 51.4 ± 9.94 years, p < 0.001), had more advanced CKD (stages 2–3b: 84.6% vs. 20.0%, p < 0.001), and higher albuminuria (moderate: 80.3% vs. 19.0%; severe: 18.4% vs. 0%, p < 0.001). They also showed poorer glycemic control, elevated urea and creatinine, lower serum albumin, dyslipidemia, elevated liver enzymes, and higher uric acid (all p < 0.05). Vitamin D deficiency was more prevalent in DN (37.7% vs. 8.0%, p < 0.001). Unadjusted multinomial regression indicated that T2DM patients without nephropathy had a 91% lower risk of vitamin D deficiency (RRR 0.09; 95% CI 0.04–0.19, p < 0.001) and an 87% lower risk of insufficiency (RRR 0.13; 95% CI 0.05–0.26, p < 0.001) compared with DN patients. After adjusting for age, HbA1c, creatinine, duration of diabetes and eGFR, the reduced risk of deficiency remained significant (RRR 0.04; 95% CI 0.01–0.16, p < 0.001), while the association with insufficiency was no longer significant (p = 0.310). Conclusions: This study shows a significant association between vitamin D deficiency and diabetic nephropathy, though its cross-sectional design precludes causal inference. Reverse causality and residual confounding cannot be excluded. Patients with DN had poorer glycemic control, dyslipidemia, and renal function, along with more frequent vitamin D deficiency. Routine vitamin D monitoring may support early detection and risk stratification in T2DM.