Diabetic neuropathy is a very common complication of diabetes mellitus. Thus, measuring the incidence of diabetic neuropathy is a key element in tracking the progress of epidemics of diabetes mellitus and an indication of early accessibility for healthcare in terms of type 2 diabetic patients. To assess survival, incidence, and predictors of diabetic neuropathy among type 2 diabetic patients in hospitals of Addis Ababa from June 25 to August 25, 2023. An institutional-based retrospective follow-up study design was used among newly diagnosed type 2 diabetic patients at hospitals of Addis Ababa. A chart review tool that contains socio-demographic, clinical, and comorbidity characteristics, biochemical characteristics, and the status of type 2 patients was used. A cleaned data was exported from Epi-data manager 4.6 version to SPSS version 25 for analysis. Bivariate Cox regression analysis was done to identify predictors of diabetic neuropathy at a 95% confidence level. A total of 414 type 2 diabetic patients were included in the study. Of these, 97 (23.4%) developed diabetic neuropathy. Variables like having hypertension (AHR 11.25, 95% CI 3.73-33.93), anemia (AHR 4.18, 95% CI 1.78-9.82), high-density lipoprotein < 40 mg/dl (AHR 5.07, 95% CI 1.38-18.67), high creatinine level (AHR 14.67, 95% CI 4.27-50.40), diabetic retinopathy (AHR 4.32, 95% CI 1.32-14.18), and diabetic nephropathy (AHR 2.50, 95% CI 1.09-6.57) were associated with the incidence of diabetic neuropathy. The mean time to develop diabetic neuropathy was 4.94 years, CI (4.50-5.38), and the mean survival time was 6.61 years. The incidence of diabetic neuropathy was high relative to other studies. Variables like having hypertension, anemia, high-density lipoprotein, high creatinine level, diabetic retinopathy, and diabetic nephropathy were predictors of diabetic neuropathy. The mean time to develop diabetic neuropathy was 5 years, with a survival mean time of 7 years.