Aim: To investigate the effects of ezetimibe on the urine albumin creatinine ratio (UACR) and kidney parenchyma fat content (kidney-PF) in individuals with type 2 diabetes (T2D) and early chronic kidney disease. Materials and Methods: A randomized, double-blind, placebo-controlled study of ezetimibe 10 mg once daily for 16 weeks in individuals with T2D and a UACR of 30 mg/g or higher was conducted. Kidney-PF was assessed with magnetic resonance spectroscopy. Geometric mean changes from baseline were derived from linear regressions. Results: A total of 49 participants were randomized to ezetimibe (n = 25) or placebo (n = 24). Overall, mean ± standard deviation age was 67 ± 7 years, body mass index was 31 ± 4 kg/m² and the proportion of men was 84%. The mean estimated glomerular filtration rate was 76 ± 22 mL/min/1.73m² and median (first-third quartile) UACR was 95 (41-297) mg/g. Median kidney-PF was 1.0% (0.3%-2.1%). Compared with placebo, ezetimibe did not significantly reduce UACR (mean [95% confidence interval] change: −3% [−28%-31%]) or kidney-PF (mean change: −38% [−66%-14%]). In participants with baseline kidney-PF above the median, ezetimibe reduced kidney-PF significantly (mean change: −60% [−84%-−3%]) compared with placebo, while the reduction in UACR was not significant (mean change: −28% [−54%-15%]). Conclusions: Ezetimibe did not reduce the UACR or kidney-PF on top of modern T2D management. However, kidney-PF was reduced with ezetimibe in participants with high baseline kidney-PF.