In the present study we determined the association of angiotensin converting enzyme (ACE) and plasminogen activator inhibitor-1 (PAI-1) gene polymorphisms with diabetic retinopathy (DR) and its sub-clinical classes in Pakistani type 2 diabetic patients. A total of 353 diabetic subjects including 160 DR and 193 diabetic non retinopathy (DNR) as well as 198 healthy controls were genotyped by allele specific polymerase chain reaction (PCR) for ACE Insertion/Deletion (ID) polymorphism, rs4646994 in intron 16 and PAI-1 4G/5G (deletion/ insertion) polymorphism, rs1799768 in promoter region of the gene. To statistically assess the genotype-phenotype association, multivariate logistic regression analysis was applied to the genotype data of DR, DNR and control individuals as well as the subtypes of DR. The ACE genotype ID was found to be significantly associated with DR (p = 0.009, odds ratio (OR) 1.870 [95% confidence interval (CI) = 1.04-3.36]) and its sub-clinical class non-proliferative DR (NPDR) (p = 0.006, OR 2.250 [95% CI = 1.098-4.620]), while PAI polymorphism did not show any association with DR in the current cohort. In conclusion in Pakistani population the ACE ID polymorphism was observed to be significantly associated with DR and NPDR, but not with the severe form of the disease i.e. proliferative DR (PDR).