Both type 2 diabetes and hypothyroidism are highly prevalent disorders in the community. The existing data regarding prevalence of hypothyroidism in patients with diabetes comes mostly from small studies. There are only two studies with a sample size of more than 1000 diabetic patients, none of which have been done in South Asians. The present study evaluated patients with type 2 diabetes for presence of hypothyroidism and the clinical factors associated with it. The demographic, anthropometric, clinical, and biochemical parameters of consecutively enrolled patients with diabetes were systematically collected and analyzed. A total of 1152 middle aged patients with type 2 diabetes with a mean duration of diabetes of around 10 years were enrolled. Nearly 40 percent of the patients were obese and overweight, respectively, for South Asian standards and abdominal obesity was seen in around 90% patients. Clinical hypothyroidism (TSH>10 mIU/ml) was present in 113 of patients (9.83%) and another 68 patients (5.9%) had subclinical hypothyroidism (TSH 5-10 mIU/ml). Anemia (odds ratio : 2.19), overweight/obese status (odds ratio 2.07), and known dyslipidemia (odds ratio : 1.99) were found to have independent association with clinical hypothyroidism. HbA1c, abdominal obesity, poor control of hypertension, lipid parameters, microalbuminuria, and renal dysfunction showed no difference among patients with hypothyroidism when compared with euthyroid patients. Subclinical hypothyroid patients had no difference in any of the above analyzed parameters when compared to the euthyroid patients. This study shows that a significant proportion of type 2 diabetes patients suffer from clinical or subclinical hypothyroidism and screening for the same may be appropriate.