The ability of microalbuminuria to predict early progressive renal function decline in type 1 diabetic patients has been questioned. To resolve this, we determined the plasma proteome differences between microalbuminuric patients with type 1 diabetes and stable renal function (controls) and patients at risk for early progressive renal function decline (cases) and asked whether these differences have value as surrogate biomarkers. Mass spectrometry was used to analyze small (<3 kDa) plasma peptides isolated from well-matched case and control plasma obtained at the beginning of an 8–12 year follow-up period. A Spearman analysis of plasma peptide abundance and the rate of renal function decline during follow-up identified seven masses with a significant negative correlation with early progressive renal function decline. Tandem mass spectrometry identified three fragments of high-molecular-weight kininogen. Increased plasma high-molecular-weight kininogen in the cases was confirmed by immunoblot. One peptide, des-Arg9-BK(1–8), induced Erk1/2 phosphorylation when added apically to two proximal tubular cell lines grown on permeable inserts. Thus, we have identified plasma protein fragments, some of which have biological activity with moderate to strong correlation, with early progressive renal function decline in microalbuminuric patients with type 1 diabetes. Other peptides are candidates for validation as candidate biomarkers of diabetes-associated renal dysfunction.