AIM: To investigate diabetic retinopathy (DR) prevalence in Chinese renal-biopsied type 2 diabetes mellitus (T2DM) patients with kidney dysfunction, and to further evaluate its relationship with diabetic nephropathy (DN) incidence and the risk factors for DR development in this population. METHODS: A total of 84 renal-biopsied T2DM patients were included. Fundus and imaging examinations were employed for DR diagnosis. Demographic information and clinical measures along with renal histopathology were analyzed for comparisons between the DR and non-DR groups. Risk factors on DR development were analyzed with multiple logistic regression. RESULTS: DR prevalence was 50% in total. The incidences of DN, non-diabetic renal disease (NDRD) and mixed-type pathology were 47.6%, 19.0% and 33.3% in the DR group respectively, while 11.9%, 83.3% and 4.8% in the non-DR group. Systolic blood pressure, ratio of urinary albumin to creatine ratio, urinary albumin, 24-hours urinary protein, the incidence and severity of DN histopathology were found statistically increased in the DR group. Multiple logistic regression analysis showed histopathological DN incidence significantly increased the risk of DR development [odds ratio (OR)=21.664, 95% confidential interval (CI) 5.588 to 83.991, P<0.001 for DN, and OR=45.475, 95%CI 6.949 to 297.611, P<0.001 for mixed-type, respectively, in reference to NDRD)], wherein DN severity positively correlated. CONCLUSION: Renal histopathological evidence indicates DN incidence and severity increases the risk of DR development in Chinese T2DM patients inexperienced of regular fundus examinations.