BackgroundDepression commonly coexists with diabetes leads to complications and worsens the outcome. Even though the problem affects low‐ and middle‐income countries including Ethiopia, only a few studies have been done to show the magnitude of the problem and factors associated with it. So, the study was conducted to fill those gapsObjectiveThe main objective of this study was to assess psychosocial and clinical factors associated with depression among diabetic patients in Amhara region comprehensive specialized hospitals, Ethiopia, 2022.MethodsA hospital‐based cross‐sectional study was conducted in randomly selected hospitals of Amhara region from January 7 to February 10, 2022. A total of 426 diabetic patients who were on outpatient follow‐up were selected using a multistage sampling technique. A p‐value of ≤0.25 in the bivariable analysis was used to select variables for the multivariable analysis. A p‐value < 0.05 within a 95% confidence interval was considered to be significantly associated factors.ResultOut of 426 interviewed diabetes patients 203 (47.7%) had depression. Moderate physical activity (AOR = 0.50, 95% CI (0.29, 0.86)). low medication adherence (AOR = 2.10, 95% CI (1.22, 3.62)), medium medication adherence (AOR = 1.78, 95% CI (1.04, 3.06)), and high social support (AOR = 0.54, 95% CI (0.33, 0.91)) were significantly associated with depression among diabetic patients.ConclusionThe overall prevalence of depression among diabetic patients was higher than in other developing countries. Hence, special attention to preventing depression and maintaining mental illness among patients with chronic illnesses, especially diabetes should be given.