Aim - To establish the prevalence, severity, and risk factors for diabetic retinopathy in a representative sample of Victorian residents aged 40 years and older. Methods - A population based, cluster sampling method was used to recruit 4744 participants (86% participation rate). Nine randomly selected, suburban Melbourne clusters and four randomly selected, rural Victorian clusters were used. Participants provided a detailed medical and personal history and underwent an ocular examination including funduscopy and fundus photography. Rural participants provided a blood sample, from which the glycosylated haemoglobin percentage was measured. The diagnosis of diabetic retinopathy was based on fundus photographs from participants with self reported diabetes. Results - The prevalence of diabetic retinopathy among people with self reported diabetes was 29.1%. The prevalence of untreated, vision threatening retinopathy was 2.8%. Retinopathy was positively associated with a longer reported duration of diabetes diagnosis (p < 0.01) and with higher fractions of glycosylated haemoglobin (p < 0.01). Retinopathy was not significantly associated with age, ethnicity, body mass index, glaucoma, myopia or intake of alcohol, tobacco, or aspirin (all p > 0.05). Conclusions - Most people in Victoria with proliferative diabetic retinopathy or clinically significant macular oedema have received laser treatment. There remains however, a small but important group who have not received treatment and whose vision is threatened. People with diabetes should be encouraged to maintain strict glycaemic control and to undergo regular screening to delay or prevent the development of retinopathy.