Aim: Diabetes mellitus, being a chronic disorder has been found to be associated with psychological distress in the form of anxiety and depression. The present study aimed to ascertain the clinical predictors of psychological distress and depression among patients with diabetes mellitus. Methodology: The present cross-sectional questionnaire-based study recruited 100 patients with type 2 diabetes mellitus from a tertiary care hospital in India. Presence of distress was assessed using cut-off scores on General Health Questionnaire (GHQ-12). Binary logistic regression analysis was used to find the independent predictors of having psychological distress as per GHQ-12. Depressive symptoms were assessed using Hamilton Depression Rating Scale (HAM-D) among patients who were found to be distressed as per GHQ-12. Result: Psychological distress as per GHQ-12 cut-off was present in 51% of the sample. The patients with psychological distress were less likely to be married and belong to nuclear family, have a longer duration of diabetes mellitus, have higher fasting and post-prandial blood sugars, and were more likely to have dyslipidaemia, being prescribed insulin, have complications of diabetes mellitus and have a past history of depression. Logistic regression analysis revealed increased fasting glucose and use of insulin to be independent predictors of having psychological distress. Among those with significant distress, 18 (35.3%), 25 (49.0%) and 8 (15.7%) had mild, moderate and severe depressive symptoms according to HAM-D. Discussion: The present study suggests that several diabetes-related clinical parameters predispose to the occurrence of psychological distress among patients with diabetes. Conclusion: Clinicians need to be sensitive to the presence of psychological distress and depression in patients with diabetes who have such predisposing factors.