Introduction: Diabetic nephropathy is the leading cause of End Stage Renal Disease in the world, accounting for more than one third of the cases. Micro albuminuria is a marker of wide spread micro vascular damage in Type 2 Diabetes Mellitus and an earliest marker for nephropathy. The correlation between presence of overt proteinuria and proliferative diabetic retinopathy have been demonstrated in both Type 1 and Type 2 diabetic patients. There is an increasing evidence that micro albuminuria could be used as a marker for early diabetic retinopathy. However, this relationship has not been established in our setting. Hence, we planned to evaluate the prevalence as well as correlation of micro albuminuria and retinopathy in patients of Type 2 Diabetes Mellitus. Material and Methods: 100 Type 2 diabetic patients willing to participate, were enrolled in the study after due approval from the Institutional Ethical committee. Prevalence of micro albuminuria was checked using Micral test. Body Mass Index and Glycosylated Hemoglobin were also measured. Patients were evaluated by direct and indirect ophthalmoscopy to look for evidence of retinopathy. Results: 56% patients were male with majority of them (70%) were in the age group of 40-60 years. In 39% patients, duration of diabetes was less that 5 years and equal percentage of patients had micro albuminuria. 45% patients showed signs of diabetic retinopathy, whereas, both micro albuminuria and retinopathy were observed in 32% of patients (p <0.001). Compared to overall prevalence of micro albuminuria and retinopathy, patients with age more than 50 years showed higher prevalence of 51.61% and 56.45% (p=0.001) respectively. Micro albuminuria (52.45%) and diabetic retinopathy (57.37%) were more likely with duration of diabetes above 6 years (p=0.001). Other factors which were statistically significant were Glycosylated Hemoglobin (HbA1c) more than 7% and Body Mass Index (BMI) >25kg/ m 2. Conclusion: The study showed that there is significant correlation between the presence of micro albuminuria and diabetic retinopathy. Several factors like increase in age, duration of diabetes, HbA1c levels on admission and body mass index are associated with increased prevalence of micro albuminuria and diabetic retinopathy.