Type 2 diabetes mellitus consists of dysfunctions characterized by hyperglycemia and resulting from combination of resistance to insulin action and inadequate insulin secretion. Most of diabetic patients report significant gastrointestinal symptoms. Entire GI tract can be affected by diabetes from oral cavity to large bowel and anorectal region. Proteins, carbohydrates, fats, and most fluids are absorbed in small intestine. Malabsorption may occurs when proper absorption of nutrients does not take place due to bacterial overgrowth or altered gut motility. The present study was planned to measure various malabsorption parameters in type 2 diabetic patients. 175 patients and 175 age and sex matched healthy controls attending Endocrinology Clinic in PGI, Chandigarh were enrolled. Lactose intolerance was measured by using non-invasive lactose hydrogen breath test. Urinary d-xylose and fecal fat were estimated using standard methods. Orocecal transit time and small intestinal bacterial overgrowth were measured using non-invasive lactulose and glucose breath test respectively. Out of 175 diabetic patients enrolled, 87 were males while among 175 healthy subjects 88 were males. SIBO was observed in 14.8 % type 2 diabetic patients and in 2.8 % of controls. There was statistically significant increase (p < 0.002) in OCTT in type 2 diabetic patients compared with controls. OCTT was observed to be more delayed (p < 0.003) in patients who were found to have SIBO than in patients without SIBO. Lactose intolerance was observed in 60 % diabetic patients and 39.4 % in controls. Urinary d-xylose levels were also lower in case of diabetic patients but no significant difference was found in 72 h fecal fat excretion among diabetic patients and controls. Urinary d-xylose and lactose intolerance in SIBO positive type 2 diabetic patients was more severe as compared to SIBO negative diabetic patients. From this study we can conclude that delayed OCTT may have led to SIBO which may have instigated the process of malabsorption among type 2 diabetic patients.