Introduction. Diabetes develops in 4% of all the pregnancies worldwide, and its prevalence ranges from 1 to 14%, and 7% are complicated and results in prenatal morbidity and mortality. The disease affects women and their babies during pregnancy, labor, and delivery. However, little is known about its prevalence, birth outcomes, and associated factors in the study setting. Method. A facility-based retrospective cross-sectional study was done on all deliveries attended from January 1, 2015, to December 31, 2017, to determine the prevalence of diabetes and birth outcome. The mothers who had complete data record were identified and consecutively reviewed. The data were entered in EpiData Version 4.2 and exported to SPSS Version 23.0 for analysis. Results. Of the 14039 women who gave birth during the study period, 2.6% of them had diabetes mellitus, and from reviewed data, 54.6% had gestational diabetes and 45.4% had pregestational diabetes. Out of the diabetic mothers, 57.8% delivered by cesarean section, 39.9% by spontaneous vaginal delivery, and 26% of the pregnancies ended up with pregnancy-induced hypertension. Regarding the fetal outcome, 17.9% were preterm delivery, 17.6% macrocosmic, 9.2% respiratory distress, 10.1% low birth weight, and 65% admitted to neonatal intensive care unit. Class I obesity and history of PIH were associated with adverse maternal outcomes at aOR = 95%CI 3.8 (1.29, 8.319) and aOR = 95%CI 2.1 (1.03, 4.399), respectively. Being a house wife and preterm deliveries were associated with adverse fetal outcomes at aOR = 95%CI 2.117 (1.315, 3.405) and aOR = 95%CI 9.763 (4.560, 20.902), respectively. Conclusion. The prevalence of diabetes mellitus delivered in the hospital was 2.6%. Class I obesity and previous history of pregnancy-induced hypertension were significantly associated with adverse maternal outcomes, whereas preterm delivery and being housewife were associated with adverse fetal outcome.