Elderly patients with type 2 diabetes (T2DM) are more prone to developing diabetic kidney disease (DKD). Patients with DKD can develop albuminuria, and some studies have suggested an association between metabolic syndrome and albuminuria. The prevalence of both metabolic syndrome and albuminuria increases with age. We evaluated the association of these risk factors with worsening renal function and albuminuria progression in 460 T2DM patients with a mean age of 72 years. During the 5-year follow-up period, progression of albuminuria and worsening of renal function were observed in 97 (21.2%) and 23 (5.1%) patients, respectively. After adjusting for confounding factors, the group with metabolic syndrome had a higher multivariable-adjusted hazard ratio (HR) for worsening renal function (P = 0.038) and albuminuria progression (P = 0.039) than the group without metabolic syndrome. When patients were divided into four groups according to the presence of metabolic syndrome and/or albuminuria, the HR gradually increased. The group with both albuminuria and metabolic syndrome exhibited the highest cumulative incidence of worsening renal function (P = 0.003). When we redefined metabolic syndrome to exclude the blood pressure (BP) component, similar results were obtained. We concluded that the presence of metabolic syndrome independently predicts the progression of renal disease in elderly patients with T2DM. The use of both metabolic syndrome and albuminuria provides a better risk stratification model for DKD progression than albuminuria alone.