Objective __ampersandsignmdash; To study the Serum gamma-glutamyltransferase (GGT), other liver derived enzymes and lipid profile in patients of type 2 Diabetes mellitus (DM) and find out the any correlation of liver derived enzymes with diabetic related risk factor and association between enzyme level and blood sugar level in diabetic and non diabetic subjects. Research Design and Methods__ampersandsignmdash; This is a cross-sectional prospective study in 60 cases of type 2 DM randomly selected from medical wards of a tertiary care hospital and 30 age, sex matched controls. Blood sugar, Serum gamma-glutamyl transferase (GGT), otherliver enzymes like SGOT, SGPT, ALP, Lipid profile, BMI, waist circumference and prevalence of obesity and hypertension were assessed. To define the type 2 Diabetes mellitus (DM) we used revised criteria of ADA, 1997. Results__ampersandsignmdash; GGT, Fasting Blood glucose and BMI increased statistically significant (p__ampersandsignlt;0.00l) in type 2 DM subjects when compared with the control subjects. Statistically significant difference (p__ampersandsignlt;0.05) in SGPT was found in subjects of type 2 DM. Comparison of other parameters like BP, alkaline phosphates, PL, TG and VLDL were also found Statistically significant difference (p__ampersandsignlt;0.01). Conclusions__ampersandsignmdash; serum GGT level within its normal range predicted type 2 diabetes mellitus and may alter the association between body mass index, lipid profile and type 2 DM.