Type 2 diabetes mellitus (T2DM) results in severe oxidative and nitrosative stress and inflammation when associated with hyperlipidemia. In this study, we have attempted to explore the role of autophagy in T2DM subjects with or without dyslipidemia. Experiments were carried out in isolated Peripheral blood mononuclear cells (PBMC) from study subjects and insulin resistant HepG2 cells utilizing flow cytometry, confocal microscopy and molecular biology techniques like western blotting, immunofluorescence and real time PCR. In case of T2DM with dyslipidemia, higher population of autophagy positive cell was detected compared to T2DM which may have been originated due to higher stress. Flow cytometric data indicated autophagy to be triggered by both oxidative and nitrosative stress in PBMC of diabetic dyslipidemic patients, which is a novel finding of our work. Expression of LC3 puncta, a hallmark of autophagy was observed at periphery of PBMC and Hep G2 cells in case of diabetic dyslipidemic condition. Increased expression of ATG5, LC3B and Beclin1 supports the autophagic pathway in both PBMC and Hep G2 cells. Upon blocking autophagy by 3-methyl adenine (3MA), the apoptotic cell population increased significantly. Autophagy was also been evidenced to control oxidative stress mediated up-regulation of inflammatory markers like IL-6, TNF-α. Induction of autophagy emerged to be a protective mechanism for the diabetic cells coupled with dyslipidemia. Not only Reactive oxygen species, but also reactive nitrogen species was involved in autophagy induction process. Moreover inhibition study documented autophagy to have a protective role in pro-inflammatory responses. Thus, enhancing autophagic activity may be an efficient mechanism leading to new therapeutic strategy to restore the glycemic regulation.