Background: As a leading cause of blindness in working-aged people, diabetic retinopathy is a serious threat to quality of life. There is limited information on prevalence of Diabetic Retinopathy among diabetic subjects and its associated factors in a rural setting in developing countries including Mongolia. Methods: Population based cross sectional study included either type 1 or 2 diabetic patients from Selenge province, Darkhan-Uul province, Tuv province and Dundgovi province, and done complete eye examination to detect any diabetic retinopathy including fundus examination. We classified diabetic retinopathy according to the severity and assessed risk factors. Results: Totally 1443 persons participated in this study, the overall prevalence of any diabetic retinopathy was 16.3%, the overall prevalence of macular edema was 2.7%, and the overall prevalence of vision-threatening retinopathy was 2.2%. In persons with detected diabetic retinopathy, 85.8% has mild to moderate nonproliferative diabetic retinopathy. Selenge province has the most diabetic retinopathy (22.5%) compared to Darkhan-Uul, Tuv, and Dundgovi provinces (15.3%, p=0.01; 15.1%, p=0.03; 5.5%, p<0.001) respectively. Independent risk factor for any retinopathy were longer diabetes duration (p<0.001), high systolic blood pressure (p<0.001), high level of HbA1c (p<0.001), and smoking (p<0.001). Conclusions In this study overall prevalence of diabetic retinopathy was 16.3%, and our result is lower than other studies in Asia. Longer the duration of diabetes, and higher the systolic blood pressure, HbA1c are related to the development of diabetic retinopathy. We need better control of the hypertension and diabetes mellitus in the future.