Background: Type II Diabetes Mellitus patients can develop complications over a prolonged period of time. The alterations in lipid indices can be associated with these complications. Aims:To identify changes in lipid metabolism in type 2 DM in context with the glycemic status, its relative impact on the macro & micro vascular events, and the effects of insulin therapy on the lipid indices. Methods and Material: 158 Type II diabetics were selected as cases and 30 subjects without any coincidental illness as controls were selected for the study. Total cholesterol, Triglyceride, HDL-C, Cholesterol/ HDL-C ratio and Atherogenic Index (AI) were estimated and the data was statistically analyzed. Results: Atherogenic index and CHOL/HDL-C levels were significantly higher in diabetics than in controls. Both the indices were also found to be lowered in patients on treatment with insulin. The AI in patients with complications was also significantly higher than those without complications; however CHOL/HDL-C was not significantly different. Thus using the best cutoff values AI can be used as a better indicator for complications than using the ratio of CHOL/HDL-C. Conclusion: AI can be used to indicate the presence of increased cardiovascular risk in patients with type II DM, and as a guide for the aggressive therapeutic approach.