Importance: With an increasing prevalence of diabetes mellitus (DM) and comorbid chronic kidney disease (CKD), health-related quality of life (HRQoL) in patients with DM and CKD needs to be better understood. Objective: To investigate the association between the severity of CKD on HRQoL in DM patients. Design: A cross-sectional study of a nationally representative population-based survey, the Korea National Health and Nutrition Examination Survey (KNHANES). Setting: Data collected between 2007 and 2018 from the KNHANES. Participants: Adult participants with DM who completed the self-administered European Quality of Life Questionnaire Five Dimension (EQ-5D) questionnaire (n = 7243). Exposures: CKD stages defined by the Kidney Disease Improving Global System (KDIGO) staging system. Main Outcomes and Measures: We estimated the odds ratios (ORs) and 95% confidence intervals (CIs) of the presence of having problems in the 5 dimensions (mobility, self-care, usual activities, pain/discomfort, and anxiety/depression) of EQ-5D by CKD stage after adjusting for socio-demographic parameters and comorbid conditions. In addition, the EQ-5D index, reflecting the overall health status, was compared across CKD stages. Results: Among 7243 participants (mean (standard error) age 58.2 (0.2) 56.9% male), 24.0% (n = 1768) had CKD and 8.6% (n = 775) had stage 3–5 CKD. Pain/discomfort was the most common problem (30.5%) among patients with DM. Participants with more advanced CKD were more likely to experience problems in all dimensions of EQ-5D except the anxiety/depression dimension. In particular, compared to those without CKD, the adjusted ORs (95% CI) for any problem in the usual activities dimension was 1.65 (1.30, 2.10) in CKD stage 3 and 4.23 (2.07, 8.67) in CKD stage 4–5. Moreover, participants with stage 3 (−0.016 (−0.029, −0.003)) and stage 4–5 CKD (−0.088 (−0.129, −0.048)) had significantly lower EQ-5D index than those without CKD. However, compared with no CKD, CKD stage 1–2 was not significantly associated with having any problem in any dimensions. Conclusions and Relevance: In this nationally representative study, patients with DM had a high prevalence of self-reported poor HRQoL and the prevalence increased with more advanced stages of CKD. Therefore, assessment of HRQoL and interventions are necessary at early stages of CKD in DM patients.