Diabetes mellitus shares a large proportion of kidney failure. Despite many patients suffering from diabetes mellitus and its complications in Dessie City, no study was conducted in the study area that shows the prevalence and associated factors of chronic kidney disease among diabetes mellitus patients. Therefore, this study aims to assess the prevalence of chronic kidney disease and its associated factors among adult diabetes mellitus patients attending Dessie Referral Hospital, South Wollo, Northeast Ethiopia. An institutional-based cross-sectional study was conducted at Dessie Referral Hospital among 267 randomly selected adult diabetic patients. Data were collected using questionnaires administered by interviewers. The glomerular filtration rate was estimated from serum creatinine levels. Data were entered into Epi-data version 4.6 and analyzed using SPSS version 26 software. Multi-variable logistic regression was used to determine the strength of association for the associated factors of chronic kidney disease. Variables with a p value < 0.05 were used to ascertain statistically significant associations. A total of 267 diabetic patients participated in this study. About 104 (39%) of the respondents were female and from the total, 133 (48.1%) were hypertensive. The overall prevalence of chronic kidney disease in this study was 31.5% (95% CI 25.3–37.1%). Being older (p-value = 0.003) and having hypertension (p-value = 0.043) were significant factors for chronic kidney disease among diabetes mellitus patients. This study found a high prevalence (31.5%) of chronic kidney disease among diabetic patients. Older age, having hypertension, and elevated serum creatinine were statistically significant associated factors of chronic kidney disease among patients with diabetes mellitus. Thus, clinicians should be aware of the high prevalence of chronic kidney disease in Dessie City. Moreover, emphasis should be given for old age and hypertension as contributing factors to the high prevalence in diabetic patients.