Aims: Baseline diabetic retinopathy (DR) and risk of development of microalbuminuria, kidney function decline, and cardiovascular events (CVEs) in type 2 diabetes. Methods: Post-hoc analysis of the PRIORITY study including 1758 persons with type 2 diabetes and normoalbuminuria followed for a median of 2.5 (IQR: 2.0–3.0) years. DR diagnosis included non-proliferative and proliferative abnormalities, macular oedema, or prior laser treatment. Cox models were fitted to investigate baseline DR presence with development of persistent microalbuminuria (urinary albumin-creatinine ratio > 30 mg/g); chronic kidney disease (CKD) G3 (eGFR <60 ml/min/1.73m²); and CVE. Models were adjusted for relevant risk factors. Results: At baseline, 304 (17.3 %) had DR. Compared to persons without DR, they were older (mean ± SD: 62.7 ± 7.7 vs 61.4 ± 8.3 years, p = 0.019), had longer diabetes duration (17.9 ± 8.4 vs. 10.6 ± 7.0 years, p < 0.001), and higher HbA_1c (62 ± 13 vs. 56 ± 12 mmol/mol, p < 0.001). The adjusted hazard ratios of DR at baseline for development of microalbuminuria (n = 197), CKD (n = 166), and CVE (n = 64) were: 1.50 (95%CI: 1.07, 2.11), 0.87 (95%CI: 0.56, 1.34), and 2.61 (95%CI: 1.44, 4.72), compared to without DR. Conclusions: Presence of DR in normoalbuminuric type 2 diabetes was associated with an increased risk of developing microalbuminuria and CVE, but not with kidney function decline.