Both diabetes mellitus (DM) and hepatitis C virus infection (HCVI) are associated with chronic kidney disease (CKD). The aim of this study was to evaluate whether HCVI increases the risk of end-stage renal disease (ESRD) in patients with DM.The National Health Insurance Research database of Taiwan was used to conduct this study. After excluding patients with a prior history of CKD, all patients with a first diagnosis of DM from January 1, 2000 to December 31, 2002 were enrolled. The patients who also had HCVI were defined as index cases (HCV group, n = 9787). A comparison cohort at a 1:1 ratio of random incident patients with DM without HCVI matched by age, sex, age at the diagnosis of DM, duration between the diagnosis of DM and the index date, and various comorbidities through propensity score matching were recruited (non-HCV group, n = 9787). The patients were followed until December 31, 2011.The cumulative incidence rate of developing ESRD was significantly higher in the HCV(+) group than in the non-HCV group (P = 0.008). The incidence rate ratio (IRR) for the risk of ESRD was also significantly higher in the HCV(+) group (IRR: 1.44; 95% CI: 1.09–1.89) than in the non-HCV group, especially for those with a younger age (<50 years; IRR: 2.05; 95% CI: 1.22–3.45) and HCVI within 4 years after the diagnosis of DM (IRR: 1.85; 95% CI: 1.16–2.97). After adjusting for comorbidities in multivariate Cox proportional hazard regression analysis, HCVI (HR: 1.47; 95% CI: 1.11–1.93) was an independent factor for developing ESRD in the patients with DM. After starting dialysis for ESRD, the HCV(+) patients had a similar mortality rate to those without HCVI (P = 0.84).HCVI increases the risk of developing ESRD in patients with DM, especially in younger patients and in those who develop HCVI sooner after a diagnosis of DM.