Background: Depression is one of the more common mental health conditions found among people suffering from chronic diseases. Its presence in patients with type 2 diabetes could hinder the adherence to and effectiveness of treatment. Most studies on depression among patients with diabetes are hospital‑based suggesting the need for a community‑based study to assess the correlates of depression among patients with diabetes. Aim: This study aimed to estimate the prevalence and to identify the factors influencing depression among patients with type 2 diabetes in Udupi taluk situated in southern India. Subjects and Methods: This study recruited 200 patients with type 2 diabetes from both rural and urban areas. Demographic, clinical, and diabetes‑related information were collected using a semi‑structured questionnaire. Depression was assessed using Patient Health Questionnaire‑9; a standardized questionnaire developed in the United States of America and validated in the Indian population. Results: The prevalence of depression among patients with diabetes in the community was found to be 37.5%. Most frequently, depression was mild (42, 21%) in nature with severe depression (9, 4.5%) seen the least. Several factors were found to be positively associated with depression including female gender, rural residence, unemployment, and the status of being unmarried. The presence of diabetic complications and other chronic diseases such as hypertension and obesity also were found to be associated with depression. Conclusion: Depression was found to be particularly high among the study population. Since depression could significantly hinder patient’s adherence to treatment, there is an urgent need for early diagnosis and treatment. This calls for the integration of mental health care into the management of diabetes.