Background Sexual complications of people with diabetes mellitus (DM) are often neglected by the patients as well as clinicians. The neglect is more in women due to the associated stigma and taboo. Indian studies are scanty, varied and inconsistent, regarding the impact of DM on sexual functioning in women. We studied the patterns and predictors of sexual dysfunction in women with DM. Methods We did a cross-sectional questionnaire-based study comprising 50 participants in both the study (women with DM1 and DM2) and control groups (relatives/caregivers of patients and the hospital staff), selected randomly from the medicine outpatient department from May to August 2016. Approval from the institutional ethics committee was obtained. Clinical anxiety and depression were screened using the hospital anxiety and depression scale. Sexual dysfunction was assessed through female sexual function index scale (FSFI), and predictors were assessed by correlating FSFI scores with sociodemographic and clinical parameters. Results We found that 44% of women with DM had sexual dysfunction compared with 20% in the control group (p<0.01). The pattern of sexual dysfunction was seen across the domains of desire, arousal, lubrication and orgasm. High body mass index, higher age, duration of DM, treatment with insulin and complications of DM predicted a greater degree of sexual dysfunction among women. Conclusion Sexual dysfunction is common in women with DM, irrespective of the type of DM and coexisting psychological factors such as depression and anxiety.