ObjectivesTo estimate the prevalence of anxiety and depression and identify the associated factors among people with type 2 diabetes mellitus (T2DM) visiting diabetes clinics of Pokhara Metropolitan, Nepal.DesignCross-sectional study.SettingThree diabetes clinics in Pokhara Metropolitan, Nepal, from May to July 2021.Participants283 people with T2DM visiting selected diabetes centres of Pokhara Metropolitan.Outcome measuresAnxiety and depression were the outcome measures. Face-to-face interviews were conducted using a structured questionnaire comprising information related to participants’ sociodemographic profile and several factors along with Hospital Anxiety and Depression-Anxiety subscale and Patient Health Questionnaire-9 to assess the levels of anxiety and depression, respectively. Pearson’s Χ2tests and binary logistic regression were performed to examine association between dependent and independent variables at 5% level of significance.ResultsThe prevalence of anxiety and depression was 31.4% (95% CI 26.2% to 37.5%) and 36.4% (95% CI 30.8% to 42.0%), respectively. Anxiety was found to be associated with a lower level of perceived social support (adjusted OR (AOR) 2.442, 95% CI 1.020 to 5.845), multiple complications (AOR 2.758, 95% CI 1.015 to 7.334) and comorbidities (AOR 2.110, 95% CI 1.004 to 4.436), severe COVID-19 fear (AOR 2.343, 95% CI 1.123 to 4.887) and sleep dissatisfaction (AOR 1.912, 95% CI 1.073 to 3.047). Economical dependency (AOR 1.890, 95% CI 1.026 to 3.482), no insurance (AOR 2.973, 95% CI 1.134 to 7.093), lower perceived social support (AOR 2.883, 95% CI 1.158 to 7.181), multiple complications (AOR 2.308, 95% CI 1.585 to 6.422) and comorbidities (AOR 2.575, 95% CI 1.180 to 5.617), severe COVID-19 fear (AOR 2.117, 95% CI 1.009 to 4.573), alcohol use (AOR 2.401, 95% CI 1.199 to 4.806) and sleep dissatisfaction (AOR 1.995, 95% CI 1.093 to 3.644) were found to be associated with depression.ConclusionThis study showed high prevalence levels of anxiety and depression among people with T2DM. Strengthening social support and focusing on people with diabetes suffering from comorbidity and complications could help to reduce their risk of mental health problems.