Aim - To assess the prevalence of diabetic retinopathy and the visual impairment caused by it in an urban population in southern India in order to determine its public health significance. Methods - 2522 subjects (85.4% of those eligible), a representative sample of the population of Hyderabad city in southern India, underwent interview and detailed dilated eye examination during 1996-7 as part of the Andhra Pradesh Eye Disease Study. Results - 124 subjects, all ≥ 30 years old, reported that they had diabetes, an age-sex adjusted prevalence of 7.82% (95% confidence interval (CI) 5.76-9.88%) in this age group. Diabetes was diagnosed at age ≥ 30 years in all but two subjects. The duration since diagnosis of diabetes was < 10 years in 75.6% and ≥ 15 years in 6.7%. Diabetic retinopathy was present in 28 subjects, 1.78% (95% CI 1.09-2.48%) of those ≥ 30 years old. Most of the diabetic retinopathy was of the mild (50%) or moderate (39.3%) non-proliferative type; one subject (3.6%) had proliferative retinopathy. Multiple logistic regression revealed that the odds of having diabetic retinopathy were significantly higher in those ≥ 50 years than in those 30-49 years old (odds ratio 7.78, 95% CI 2.92-20.73). Three subjects had visual impairment between 6/12 and 6/38 in either eye due to diabetic retinopathy, 0.19% (95% CI 0-0.41%) of those ≥ 30 years old. Conclusion - Visual impairment due to diabetic retinopathy was relatively uncommon in this urban Indian population in 1996-7. However, this could change in the near future with an increase in duration of diabetes because of the anticipated aging of India's population and the recent suggestion of increase in diabetes prevalence in urban India, and therefore should be monitored.