Background: Diabetes mellitus is associated with an increased prevalence of anemia, particularly in patients with nephropathy. We undertook this survey to determine the relationship between anemia and the renal production of erythropoietin in patients with diabetes mellitus. Methods: The clinical data of 722 patients were obtained, including markers of diabetic complications. Erythropoietin levels were measured in the same samples. Patients with a full blood cell count, iron indexes, and renal function within the normal range (n = 151) were used to define the reference range for this population. Anemic patients who had erythropoietin levels within this range were defined as having an "inappropriate erythropoietin response to anemia." Results: Of the 722 patients, 168 (23.3%) had anemia, of whom 130 (77.4%) had erythropoietin levels inappropriately within the normal range. Although 55.4% of anemic patients had moderate renal impairment, erythropoietin levels were also inappropriately low in 69.2% of anemic patients with normal renal function. However, most of these patients (17 of 26) had diabetic kidney disease, as denoted by albuminuria. Conclusions: The failure to produce erythropoietin in response to a declining hemoglobin level is a common contributor to anemia in patients with diabetes mellitus. This seems to be a manifestation of diabetic kidney disease, in the presence or absence of renal impairment.