Background. Diabetes mellitus and depression are very common diseases worldwide, and the prevalence rates of both conditions are increasing rapidly. Depression among patients with diabetes mellitus results in poor glycemic control through different mechanisms. Besides, the coexistence of a chronic medical illness with depression reduces the probability of recognizing and treating depression. The study is aimed at assessing the prevalence and factors associated with depression among adults with diabetes mellitus. Methods. A hospital-based cross-sectional study was conducted among adult diabetes mellitus patients on follow-up in Mizan-Tepi University Teaching Hospital and Tepi General Hospital. A consecutive sampling technique was employed to recruit the study participants, and data were collected through face-to-face interview and medical chart review. Depression was measured using Patient Health Questionnaire-nine (PHQ-9). Binary logistic regression analysis was done and a p value of less than 0.05 was used as a level of significance. Results. The prevalence of depression among study participants was 37.0% (95% CI 32.0%-42.0%). The majority (44.7%) of the patients had mild depression, while only 2% had severe depression. Being male (AOR=1.92, 95% CI: 1.15-3.22), urban residence (AOR=3.02, 95% CI: 1.57-5.78), single marital status (AOR=7.72, 95% CI: 3.6-16.53), duration of diabetes mellitus 5 years and more (AOR=2.00, 95% CI: 1.21-3.5), and having sexual dysfunction (AOR=3.55, 95% CI: 2.13-5.91) were associated with increased odds of depression among diabetes mellitus patients. Conclusions. The prevalence of depression among diabetes mellitus was high. Therefore, the patients should be thoroughly screened for this comorbid condition, and the significant factors should be addressed during routine follow-up.