Anemia is more common and more severe in diabetics compared to nondiabetic chronic kidney disease patients. This study was undertaken to determine the prevalence of anemia and the contribution of level of nephropathy to anemia in type 2 diabetic patients. A total of 1,962 patients with type 2 diabetes were evaluated for anemia and biochemical profile. 19.6% of the patients had anemia. 38.1% of patients had albuminuria, 8.1% had moderate (creatinine clearance (CrCl) <60 mL/min/1.73 m 2 ) and 31.4% had mild (CrCl = 60-90 mL/min) renal impairment. Diabetic patients with moderate renal impairment had significantly more anemia than diabetics with mild renal failure (30% vs. 9%, P = 0.000 Albuminuria was also associated with anemia (8.4% vs. 5.7%, P = 0.000). Cardiovascular disease and retinopathy were also more frequent in diabetic patients with anemia (P = 0.01 and 0.001, respectively). In conclusion, anemia is a highly prevalent finding in Iranian type 2 diabetic patients. Any degree of renal impairment and albuminuria are the greatest risk factors for anemia in these patients.