Background: Diabetic retinopathy develops due to the damage of small capillaries of the retina and leaking of blood through these fragile vessels. It has developed via nonproliferative to proliferative retinopathy . It had gradually increased throughout the globe since 1980 and more frequent in Africa that accounted 52%. About 20% Ethiopians was victims of retinopathy and Amhara region was the most affected one. Diabetic retinopathy was gradually increased even if Ethiopia had started projects to prevent in collaboration with the world health organization. Objective: This study aimed to assess the incidence of retinopathy and its predictors among type 2 diabetic patients in Felege Hiwot Hospital from 2010 to 2020, Northwest Ethiopia. Methods: Institutional based retrospective cohort study was conducted in Felege Hiwot referral Hospital among 514 newly diagnosed diabetic patients from January 2010 to December 2020 and followed until retinopathy was developed. Data were collected by reviewing patient charts. Patients were followed annually and Person-time at risk was measured in years. Data were entered into Epi Data version 3.1 and transferred to STATA version 14 for analysis. Schoenfeld proportional assumption test and Cox Snell residual model fitting were done and met the criteria. Univariable analysis was done for each predictor of diabetic retinopathy using cox regression at 25% significance level. Finally, five variables were identified using stepwise backward regression as predictors of retinopathy at 0.05 significance level and 95% of confidence level. Result: The median survival time was 10.58 (CI: 8.49,¬¬ 12.67) years. The incidence of retinopathy was 37.64 (95% CI: 30.31, 46.73) per 1000 Person-years. Residence (AHR : 2.60 95% CI: 1.41, 4.81), body mass index (AHR:1.053, 95% CI: 1.002, 1.11, p=0.042), Protein urea (AHR:2.13, 95%CI: 1.35, 3.35, p=0.001), high-density lipoprotein (AHR:0.58, 95%CI: 0.36, 0.94, p=0.026) and low-density lipoprotein (AHR:2.28, 95%CI: 1.38, 3.76, p=0.001) times increased the risk of diabetic retinopathy. Conclusion: The incidence rate of this study was higher. Urban residents, increment of body mass index, positive urine protein, high-density lipoprotein less than 40 mg/dl and low-density lipoprotein more than 100 mg/dl were significant predictors of retinopathy for type 2 diabetic patients. Key Words: Diabetic retinopathy, incidence, Type two Diabetes mellitus, and predictors