AIM: To assess the current knowledge and practices in diabetic eye care and referral system regarding diabetic retinopathy (DR) in health centers of Islamabad and Rawal-Pindi. METHODS: A cross-sectional study was carried out in 4 government and private health centers in Rawalpindi-Islamabad from May 2018 to Oct. 2018. A total of 38 Primary Care Physicians (general practitioners, family physicians, and internists) were recruited out of which data for 2 were either not returned, or were missing partially. Data were collected through a 27-item consented & validated, multiple-choice questionnaire based on physician characteristics, knowledge and practice of diabetic eye care and challenges faced due current DR referral system. Descriptive analyses for all variables were performed including, mean and standard deviation. Analytical analyses were also conducted to study association between different study variables. RESULTS: Mean scores of knowledge for general practitioners, family physicians, and internists were 41.7%, 42.0% and 46.6% respectively. A lack of knowledge, and suboptimal practices were observed regarding signs, symptoms, screening, testing, evaluation and referral of DR regardless of physicians’ specialty, or years in practice. Lack of expertise regarding direct ophthalmoscopy, interpretation of findings, and referral to an ophthalmologist were noted. Physicians who performed consultation and counselling according to patients’ needs referred more patients to an ophthalmologist than those who restricted their consultation to a fixed amount of time and had more patients per unit time (P=0.01). Physicians who had taken care of less than 5 number of patients with DR marked less incorrect answers with no significantly greater number or correct answers compared to physicians who had taken care of more than 5 number of patients with DR (P=0.044). An association of more than 5 patients with DR taken care of with more need based patient consultation and counselling was also noted (P=0.017). An evaluation of the current referral system for DR revealed major loopholes in the health care infrastructure, proper guidelines, properly functioning equipment, check and balances, and lack of guidance to physicians regarding acquiring and updating knowledge regarding DR. CONCLUSION: Lack of updated and adequate knowledge, practices among primary care physicians, and suboptimal diabetic eye care and referral system have contributed to late presentation of DR. Interventions are needed to improve current diabetic eye care, and knowledge and practices of primary care physicians.