BACKGROUND In Nigeria, with a rising incidence of diabetes mellitus (DM), there are no controlled studies of specific psychiatric morbidity among sufferers. OBJECTIVE To assess the prevalence of specific psychiatric disorders and general cognitive impairment in patients with diabetes mellitus. METHODS Using Wing's Present State Examination and the Mini-Mental State Examination, we assessed the prevalence of specific psychiatric disorders and cognitive impairment among 100 DM patients attending an out-patient clinic, in comparison with a matched non-clinic sample; and examined the relationship between psychiatric morbidity and clinical variables. RESULTS They were predominantly males (66%), mean age 43.0 years, mean duration of illness, 7.7 years and in low level occupations. Only 11 of the patients had sexual dysfunction (11%) and psychiatric symptoms (31%). Psychiatric diagnosis (ICD-10) were, generalised anxiety (6%) and mild depressive disorder (4%). Two had subjective memory disturbance. Insulin-dependent patients had significantly more widespread psychiatric symptoms than the non-insulin dependent. Psychiatric symptomatology was significantly associated with low occupational status, duration of illness and sexual dysfunction. CONCLUSIONS Health education, subsidizing the cost of treatment, and physicians' sensitivity to the emotional condition of patients, will help to relieve psychic distress and make for more adequate management.