To investigate corneal neuropathy and corneal nerve alterations in type 2 diabetes mellitus (DM) patients with different diabetic retinopathy (DR) status. A total of 87 eyes of 87 patients with DM and 28 eyes of 28 healthy control subjects were included in the study. DM patients were further classified into 3 groups: patients without DR (NDR), patients with non-proliferative DR (NPDR), and patients with proliferative DR (PDR). PDR patients were classified into 2 groups regarding having undergone retinal argon laser photocoagulation treatment (ALP). Ocular surface disease index score (OSDI), average tear break-up time (A-BUT), corneal sensitivity and cornea nerve fiber length (CNFL), cornea nerve fiber density (CNFD), and cornea nerve branch density (CNBD) of the cornea subbasal nerve plexus (SBNP) were measured using in vivo confocal microscopy (IVCM). OSDI scores increased and A-BUT decreased in DM patients compared to the control group, but no significant difference was found between DM patient groups. Corneal sensitivity decreased in DM patients who developed DR, compared to both the controls and the NDR group. CNFD and CNFL decreased in NPDR and PDR patients compared to controls. CNFD and CNBD decreased in patients who had developed PDR, compared to all three groups. All IVCM parameters decreased with DR progression. IVCM can detect early structural corneal nerve changes in diabetic patients. The presence of DM affects ocular surface parameters, especially in long-term DM patients. Corneal sensitivity loss is increased with the presence of DR. All IVCM parameters decrease with DR development and its progression.