Depression is commonly found as a co-morbid condition in patients with diabetes. The co-existence of depression is associated with poor glycaemic control and low medication adherence. The objective of this study was to assess and compare the severity of depression in patients with Type II diabetes taking OHA versus Insulin. A prospective observational study conducted  among  200 diabetic patients for a period of 6 months in the general medicine department of a tertiary care hospital, with established T2DM  satisfying inclusion and exclusion criteria were evaluated for depression by  using Hamilton Depression Rating scale (HAMD) with the help of physician. Finally comparing the severity of depression among patients  taking OHA versus Insulin. Out of 200 diabetic patients, 124 (62%) patients were depressed. About 22% patients shows moderate depression  ,followed by mild depression (20%), severe (10.5%) and very severe(9.5%). Mild-Moderate level of depression is more prevalent in diabetics than in general population. Majority of the patient taking OHA had no depression ( normal, 51%) followed by mild depression (19.6%), moderate (17.6%), and only 11.8% shows severe/ very severe depression. Patients on insulin showed that 27.5% have severe or very severe depression followed by moderate (26.3%), mild (22.5%), and 23.8% have no depression. Depression is more common in patients with diabetes mellitus. Study shows that depression is more prevalent in patients taking Insulin as compared to those using OHA.