Objective To evaluate the role of methylenetetrahydrofolate reductase (MTHFR) gene polymorphisms and plasma homocysteine levels in patients with type 2 diabetes mellitus and diabetic retinopathy (DR). Methods Total of 208 patients with type 2 diabetes mellitus and 57 controls were recruited into the study. MTHFR genetic C677T polymorphisms were determined by PCR-RFLP. Plasma total homocysteine levels were measured using high-performance liquid chromatography (HPLC) with fluorescence detection. Results The frequencies of MTHFR TT homogeneous type, CT heterogeneous type and allele T (28.18%, 41.82%, 49.09%) were significantly higher in the type 2 diabetes mellitus with diabetic retinopathy group than those without retinopathy (18.37%, 29.59%, 33.16%) and those of controls (17.54%, 28.07%, 31.58%). The presence of the T allele appeared to have a strong association with the development of diabetic retinopathy. The odds ratio was 1.94 with a 95% confidence interval of 1.31-2.88. Moreover, plasma homocysteine levels were remarkably higher in patients with TT or CT genotype than in patients with the CC genotype. Conclusion MTHFR gene C677T mutation associated with a predisposition to increased plasma homocysteine levels may be considered as a genetic risk factor for diabetic microangiopathy (such as DR) in Chinese patients with type 2 diabetes mellitus.