This study aimed to evaluate the associations between variability of lipid parameters and the risk of kidney disease in patients with type 2 diabetes mellitus. Low-density lipoprotein-cholesterol, total cholesterol to high-density lipoprotein-cholesterol ratio and triglyceride were specifically addressed in this study. This retrospective cohort study included 105,552 patients aged 45-84 with type 2 diabetes mellitus and normal kidney function who were managed under Hong Kong public primary care clinics during 2008-2012. Those with kidney disease (estimated glomerular filtration rate < 60 mL/min/1.73 m2 or urine albumin to creatinine ratio ≥ 3 mg/mmol) were excluded. Variabilities of low-density lipoprotein-cholesterol, total cholesterol to high-density lipoprotein-cholesterol ratio and triglyceride were determined using the standard deviation of the respective parameter obtained from a mixed effects model to minimize regression dilution bias. The associations between lipid variability and renal outcomes including incident kidney disease, renal function decline defined as ≥ 30% reduction in estimated glomerular filtration rate since baseline, and end-stage renal disease (estimated glomerular filtration rate < 15 mL/min/1.73 m2) were evaluated by multivariable Cox regression. After a median follow-up of 66.5 months (0.5 million person-years in total), 49,653 kidney disease, 29,358 renal function decline, and 1765 end-stage renal disease cases were recorded. Positive linear associations between low-density lipoprotein-cholesterol and total cholesterol to high-density lipoprotein-cholesterol ratio variabilities and the risk of all renal outcomes were demonstrated. However, no association between triglyceride variability and any outcome was found. Each mmol/L increase in low-density lipoprotein-cholesterol variability was associated with 20% (Hazard ratio 1.20 [95% CI 1.15-1.25]), 38% (Hazard ratio 1.37 [95% CI 1.30-1.45]), and 108% (Hazard ratio 2.08 [95% CI 1.74-2.50]) higher risk in incident kidney disease, renal function decline and end-stage renal disease respectively. Similarly, each unit increase in total cholesterol to high-density lipoprotein-cholesterol ratio variability was associated with 35% (Hazard ratio 1.15 [95% CI 1.10-1.20]), 33% (Hazard ratio 1.33 [95% CI 1.26-1.40]), and 75% (Hazard ratio 1.75 [95% CI 1.46-2.09]) heightened risk in incident kidney disease, renal function decline and end-stage renal disease respectively. Cholesterol variability may potentially be a useful predictor of kidney diseases in patients with type 2 diabetes mellitus. Attention should be drawn to cholesterol variability when managing diabetic patients and further research is warranted to investigate the modifiable risk factors for lipid variability.