Hyperhomocysteinemia is an independent risk factor for micro and macroangiopathy in diabetic patients. We designed this study to determine the factors which regulate homocysteine levels in patients with type 2 diabetes.   Methods We conducted a cross sectional study during one month posting in the department of neurochemistry Christian medical college,Vellore as a part of fellowship training, which included 20 randomly selected Type 2 diabetic patients either on oral anti–diabetic agents or on insulin. The clinical profile of these patients was documented. Serum homocysteine, vitamin B12 &folate were analysed. Serum Homocysteine assay was done by the HPLC method.   Results     The mean serum homocysteine level was 23.01 µmol/l (normal<15µmol/l). Seventy percent of the patients had serum homocysteine level more than 15µmol/l. There was no correlation between serum homocysteine level and age, BMI, duration of diabetes, HbA1C, serum creatinine and urinary microalbumin. The median vitamin B12 was 275 pg/ml and mean serum folate level was 10.48 ng/ml. We found significant negative correlation between fasting serum homocysteine levels and vitamin B12 and folate. The median vitamin B12 levels in those with serum Homocysteine levels less than 15 and more than 15 were 592 and 210 pg/ml respectively. The mean folate in those with serum Homocysteine levels less than 15 and more than 15 were 15 and 8 ng/ml respectively. The difference in the vitamin B12 and folate levels between these two groups were statistically significant.   Conclusion       In our study hyperhomocysteinemia did not correlate with any of the microvascular complications of diabetes, but there was significant negative correlation with vitamin B12 and folate levels.This shows that hyperhomocysteinemia is an indirect marker of vitamin B12 and folate deficiency. It is important to assess vitamin B12 and folate levels in diabetic patients with elevated homocysteine levels.