The purpose of current study aims to investigate the development and progression of diabetic retinopathy (DR) in patients with diabetic nephropathy (DN) in a nationwide population-based cohort in Taiwan. Newly diagnosed DN patients and age- and sex-matched controls were identified from the Taiwanese Longitudinal Health Insurance Database from 2000 to 2010. We studied the effects of age, sex, hypertension, dyslipidemia, diabetic polyneuropathy (DPN), and medications on the development of nonproliferative DR (NPDR), proliferative DR (PDR), and diabetic macular edema (DME) in patients with DN. Cox proportional hazard regression analyses were used to estimate the adjusted hazard ratios (HRs) of the development of DR. Our results show that the adjusted HRs of NPDR and PDR were 5.01 (95% confidence interval (CI) = 4.68-5.37) and 9.7 (95% CI = 8.15-11.5), respectively, in patients with DN as compared with patients in the non-DN cohort. At 5-year follow-up, patients with DN showed an increased HR of NPDR progression to PDR (HR = 2.26, 95% CI = 1.68-3.03), and the major comorbidities were hypertension (HR = 1.23, 95% CI = 1.10-1.38 with NPDR; HR = 1.33, 95% CI = 1.02-1.72 with PDR) and DPN (HR = 2.03, 95% CI = 1.72-2.41 in NPDR; HR = 2.95, 95% CI = 2.16-4.03 in PDR). Dyslipidemia increased the HR of developing NPDR but not PDR or DME. Moreover, DN did not significantly affect DME development (HR = 1.47, 95% CI = 0.87-2.48) or progression (HR = 0.37, 95% CI = 0.11-1.20). We concluded that DN was an independent risk factor for DR development and progression; however, DN did not markedly affect DME development in this study, and the potential association between these disorders requires further investigation.