ABSTRACT BACKGROUND: Pneumonia is a common cause for hospital admissions and in-hospital mortality. Mortality in pneumonia is accelerated in the presence of co-morbid conditions. Diabetes mellitus being the most common co-morbid condition due to its high prevalence, we studied the effect of diabetes on the clinical profile of pneumonia in comparison with those without pneumonia. METHODS: We randomly selected 60 patients of pneumonia over a period of 1 year  among whom, 30 were diabetics and 30 were non-diabetics. A thorough clinical history and examination was carried out. Laboratory investigations including, microbiological, radiological, haematological investigations were carried out. Patients were followed up until their hospital stay (death or discharge). Results were analysed and compared between diabetic and non diabetic group with reference to age, sex, underlying concomitant disease, clinical features, complications, organisms, PSI scoring and mortality. Clinical data was compared with the observations of various other workers RESULTS: Poly-microbial etiology (20%), multi-lobe involvement (66.7%), complications, duration of hospital stay (12.30±4 vs 9.10±5.24 days) and PSI score was significantly higher among diabetics compared with non-diabetics. There was not statistical significant difference in mortality between diabetics (23.3%) and non diabetics (10%). Mortality in diabetics was more common in patients with age > 60yrs. Complications were more common in diabetic group like pleural effusion (6.7%), septic shock (20%), MODS, renal failure, VF (3.3% each) and cardiac arrest (6.7%). No relation was found with sex, duration of hospital stay, bacteremia, pleural effusion, signs of consolidation with mortality. CONCLUSION: In patients with pneumonia, Diabetes Mellitus is associated with poor prognosis, polymicrobial etiology, multilobe involvement, increased ICU admissions, increased severity in the form of high PSI score and mortality. This study suggests that this adverse outcome is more attributable to the underlying circumstances of patients than to uncommon microbiological findings. Certainly age, prior co morbidities as well as multilobe infiltrates have already been related to poor prognosis; however, in this study, diabetes also remained a significant prognostic factor of mortality in patients with pneumonia.