Background: Retinopathy is the clinical hallmark of generalized microangiopathy in diabetes. Aim: To examine the relation of this abnormality to end-stage renal disease (ESRD) and death in type 2 diabetes. Design: Retrospective analysis. Methods: Of 1513 type 2 diabetic patients with nephropathy participating in the Reduction of End-points in NIDDM with the Angiotensin II Antagonist Losartan (RENAAL) study, 1456 (96.5%) were assessed at baseline by ophthalmoscopy or fundus photography. RENAAL was a multinational double masked, randomized, placebo-controlled intervention study, whose primary end-point was the composite of a doubling of the baseline serum creatinine concentration, end-stage renal disease (ESRD) or death. Results: Of those assessed at baseline, 65% had diabetic retinopathy. Patients with retinopathy had higher systolic blood pressure, albuminuria and lower glomerular filtration rate (GFR), haemoglobin and serum albumin values than those without. In univariate analyses, the presence of retinopathy was associated with a 44% increase in the primary composite end-point (hazard ratio 1.44, 95%CI 1.22-1.70, p < 0.001). Patients with retinopathy had a 52% increase in doubling of serum creatinine (p < 0.001), a 47% increased risk of ESRD (p=0.002) and a 33% increase in risk of death (p=0.026) compared to those without. In multivariate analyses, the presence of retinopathy was associated with a 23% increase (p=0.015) in the primary composite end-point and a 22% increase in ESRD or death (p=0.038). Discusion: The presence of diabetic retinopathy at baseline is associated with more proteinuria, lower GFR, and a higher risk for ESRD and death in type 2 diabetic patients.