Background: Diabetic retinopathy (DR) is a sight-threatening complication of type 2 diabetes mellitus (T2DM). Understanding its occurrence and associated factors is crucial for prevention and management. This study aimed to investigate DR in T2DM patients and identify relevant factors. Methods: A 14-month hospital-based cross-sectional study was conducted at Bir Hospital, Kathmandu. Sixty T2DM patients were included, undergoing ocular examinations and fundus evaluations at Nepal Eye Hospital. DR severity was graded using the Early Treatment Diabetic Retinopathy Study (ETDRS) criteria. HbA1C levels, fasting, and postprandial blood sugar were measured. Statistical analysis included chi-square test, t-test, and logistic regression. Results: DR patients had a lower mean age (55.57±9.79 years) compared to non-DR patients (58.00±12.038 years, p=0.12). Age inversely correlated with severe DR (aOR=0.94, p=0.02). Longer diabetes duration increased DR likelihood (aOR=1.23, p=0.001) and severe DR risk (aOR=1.2, p<0.0001). Mean HbA1c was higher in DR patients (8.22±1.61%) compared to non-DR patients (7.48±1.59%, p=0.08), with marginal significance (aOR=1.44, p=0.09). Postprandial blood sugar was associated with DR (aOR=1.01, p=0.033), while fasting blood sugar was not significant. Hypertension was not associated with DR (p=0.89). Conclusion: This study reveals higher prevalence and severity of DR with longer diabetes duration. Postprandial blood sugar showed significant association with DR, while fasting blood sugar did not. HbA1c's relationship with DR was marginally significant. Effective glycemic control and regular DR screening are crucial in T2DM patients.