AIM: This study was performed to assess the prevalence of dry eye in type 2 diabetic patients, to co-relate the same with type of diabetic retinopathy (DR) and glycosylated hemoglobin levels. METHODS: 398 type 2 diabetic patients referred to Diabetes clinic were consecutively selected. All were taken detailed history pertaining to dry eye, other diseases and drugs. All were subjected to dry eye questionnaire using ocular surface disease index (OSDI), detailed slit lamp evaluation to note those with tear break up time (TBUT) of less than 10 seconds , corneal and conjunctival staining with lissamine stain score by oxford system and Schirmer's I test when less than five millimeter in five minutes at least in one eye. . All the subjects underwent glycosylated hemoglobin (HbA1C) estimation, indirect ophthalmoscopy and retinal color photography using Topcon TRC 50DX. DR was graded according to early Treatment Diabetic Retinopathy (ETDRS) criteria. RESULTS: Of 398 subjects, 160(40.2%) were men and 238(59.8%) were women. Average age of the patients was 54.2 years (range, 27-81years). Out of 398 patients, 280(70.35%) patients had diabetic retinopathy (DR) and 216 (54.3%) patients had dry eye (p value-<0.01). Dry eye was more common in patients beyond 55 years (p-value <0.001) and females (p-value <0.1). The association between dry eye and diabetic retinopathy showed, out of 216, 38.2% (26 of 68) was the dry eye prevalence in mild non proliferative diabetic retinopathy (NPDR) while, 90.9% and 96% respectively were the prevalence of dry eye in severe NPDR and PDR patients (p-value <0.001). CONCLUSION: The prevalence of dry eye in diabetics was 54.3% and has significant association with severe DR and glycosylated hemoglobin. Hence, examination for dry eye should be an integral part of the assessment of diabetic eye disease.