Context: Diabetes affects 9.2% of adults in India. About 8-16% of its population also suffer from depression. Both diseases pose a serious health challenge at individual and system level. The prevalence of depression in diabetes is much higher than in the general population. Undiagnosed and untreated depression puts people at higher morbidity and mortality risk. Aim: To study the prevalence of depression in diabetes and to identify associated risk factors. Settings and Design: Case control study carried out in an outpatient setting of a tertiary hospital in central India. Materials and Methods: One hundred and nine type 2 diabetes patients and 91 healthy controls formed the subjects of the study. Sociodemographic data were obtained on seven parameters. Comprehensive clinical data were obtained by means of standard procedures. Blood sugar levels and glycosylated hemoglobin levels were measured to assess glycemic control. Data of diabetic patients and controls as well as that of depressed and nondepressed diabetics were subjected to statistical analysis. Results: About 42.2% of diabetes patients and only 4.39% of controls had depression. About 19% of diabetics had peripheral neuropathy but had much higher neuropathic symptoms. Depression was not related to any sociodemographic or clinical factors but was strongly associated with poor glycemic control. Conclusion: Depression is highly prevalent in diabetes. Physical symptoms mask depression. Special attention needs to be paid to diagnose depression in diabetes and treat it appropriately along with effective glycemic control. Diabetes patients need to be treated collaboratively by physicians and psychiatrists.