OBJECTIVE To determine the prevalence and factors associated with diabetic retinopathy in the Australian population and to estimate the time difference between disease onset and clinical diagnosis of type 2 diabetes. RESEARCH DESIGN AND METHODS The Australian Diabetes, Obesity and Lifestyle study (AusDiab) included 11,247 adults aged > or =25 years in 42 randomly selected areas of Australia. Retinopathy was assessed in participants identified as having diabetes (based on self-report and oral glucose tolerance test), impaired fasting glucose, and impaired glucose tolerance and in a random sample with normal glucose tolerance. Data were available for 2,177 participants. RESULTS Overall, 15.3% of those with diabetes had retinopathy. The prevalence of retinopathy was 21.9% in those with known type 2 diabetes (KDM) and 6.2% in those newly diagnosed (NDM). The prevalence of proliferative diabetic retinopathy (PDR) was 2.1% in those with KDM. No cases of PDR were found in those with NDM. Untreated vision threatening retinopathy (presence of PDR or macular edema) was present in 1.2% (n = 4). Factors associated with retinopathy were duration of diabetes, HbA(1c), and systolic blood pressure. Using linear extrapolation of the prevalence of retinopathy with diabetes duration, the onset of diabetes in this population was approximately the time of diagnosis. CONCLUSIONS This is one of the first national studies of diabetic retinopathy in a developed country. The prevalence of retinopathy was similar to that in other population-based studies. Vision threatening retinopathy was relatively rare; however, four untreated cases were identified. Regular screening for diabetic retinopathy and more aggressive management of modifiable risk factors could reduce the numbers of people who develop vision-threatening retinopathy.