Background: Diabetes mellitus (DM) has a high prevalence worldwide. Anaemia is one of the most common conditions seen in diabetic patients which is the leading cause of morbidity in these patients. It leads to various complications, including microvascular and macrovascular complications. The nephropathy may undermine the renal production of erythropoietin, positively contributing to an increased anemia framework. The inflammatory situation created by kidney disease also interferes with intestinal iron absorption. Therefore, diabetic patients with kidney disease have higher risk for developing anemia. Aim : The aim of this work was to determine the prevalence and various types of anemia in patients with type 2 DM. Methods : After obtaining informed written consent, all diabetics as well as control individuals were subjected to detail history, clinical examination, and investigations as follows: fasting blood glucose, postprandial blood glucose, glycated hemoglobin, complete blood count, peripheral smear for type of anemia, reticulocyte count and renal function test, creatinine clearance, urine examination, albuminuria, and stool examination through routine and microscopic fecal occult blood test. Results : The prevalence of anemia among our studied patients with type 2 DM was 65%, with significant increase compared with the control group (10%). Diabetics had microcytic hypochromic anemia among 55%, whereas 44.6% had normocytic normochromic anemia. There was a significant negative correlation between hemoglobin level and degree of albuminuria and a significant positive correlation between hemoglobin level and creatinine clearance. Conclusion : Anemia is a common finding in patients with type 2 DM when compared with the general population. Hence in diabetic patients, it would be desirable to evaluate the hemoglobin levels often, even when the renal parameters are within the normal limits, for better quality of life.