Introduction: Diabetes mellitus (DM) is an important and common comorbid condition associated with chronic obstructive pulmonary disease (COPD). The exact prevalence of DM in COPD patients among the Indian population is unknown. Coexisting DM is associated with poor outcome in COPD patients and has a significant impact on lung function and severity of the disease. Aim: The aim of this study was to determine the prevalence of type 2 DM in COPD patients attending tertiary care hospital and to assess its impact on the severity of the disease and exacerbation. Patients and Methods: A cross-sectional study was done at a tertiary care center in Davangere from July to December 2016. Convenience sampling was used to study 412 patients attending the hospital for consultation. An interview schedule consisting of sociodemographic details and GOLD criteria 2015 to diagnose COPD and the World Health Organization criteria for DM was used. Results: The prevalence of DM was 23.05% (95) among 412 COPD patients studied. Thirty-five (8.49%) patients were newly diagnosed with DM. The prevalence in mild, moderate, severe, and very severe COPD was 14.73%, 18.94%, 36.84%, and 29.47%, respectively. DM group patients had a significant decline in lung function compared to non-DM group (mean forced expiratory volume 1% - 45.92 ± 4.22 v/s 56.64 ± 3.58, P = 0.001), and the majority of patients with DM (29.47%) were in exacerbation when compared to nonDM group (16.71%). Conclusion: The prevalence of DM is high in COPD patients, and significant numbers are newly detected. Hence, it is crucial to screen all COPD patients for DM routinely. Further diabetics tend to have more severe COPD when compared to nondiabetics.