Background: Diabetes mellitus is a growing pandemic in modern times. Regular monitoring of the blood lipid profiles is necessary to determine the best course of treatment to prevent complications like diabetic retinopathy. This study aims to assess serum lipid profile in type 2 diabetes mellitus (T2DM) and their relationship with the severity of diabetic retinopathy. Methods and Material: A hospital based cross sectional study was conducted on seventy five patients. Their fasting lipid profile- HDL, LDL, VLDL, total cholesterol, TGL, HbA1c, renal function test, FBS, PPBS were calculated. Retinal findings for severity of diabetic retinopathy were correlated to serum lipids levels. Results: Of total patients, 78.6% had dyslipidaemia. The association between lipid profile parameters and severity of diabetic retinopathy showed that triglyceride and total cholesterol showed significant positive correlation while HDL showed negative correlation. Conclusions: Significant association of serum cholesterol, triglyceride, and HDL with the severity of diabetic retinopathy indicates the importance of correcting dyslipidemia to prevent the development and progression of diabetic retinopathy.