Objective: Diabetes is a major lifestyle disorder, the prevalence of which is increasing globally. There is considerable ethnic diversity within the population of Nepal. According to the 2011 census, indigenous people comprise 35.81% of total population of Nepal. Urbanization results in several adverse impacts; physical activity decreases, shift of diet habits to-wards high-energy foods and body mass index increased considerably. Indigenous people of Kathmandu like Newar, Magar and Tamang have their own sedentary lifestyle and diet habits which include high calorie diets. Methods: This cross-sectional community-based study was conducted in 775 randomly selected participants aged 30 years and above living in urban areas of the Kathmandu Valley, Nepal. Anthropometric measurements, blood pressure measurements and fasting and post prandial blood sugar tests were also measured. IDF criteria were followed to establish the diagnosis of NIDDM. Results: Among the total participants of 775, 5.9 % (46) are diabetics and about 10 %(83) show impaired blood glucose level. Majority of the participants (73.8%) were males. The prevalence of diabetes in urban areas is higher in men than in women. About 7.4% of males are diabetics while only 1.5% of total 202 females are diabetics. About 6.4% of indigenous people are having hyperglycemia and about one-tenth of them have impaired glucose level. Among indigenous community, diabetic percentage is higher in Newar (19.6%) followed by Magar (6.5%) and Tamang (4.3%). Non-indigenous people show slightly low level of diabetes compared to indigenous inhabitants. Conclusion: Urbanization results in several adverse impacts; physical activity decreases, shift of diet habits to-wards high-energy foods and body mass index increased considerably. Indigenous people of Kathmandu like Newar, Magar and Tamang have their own sedentary lifestyle and diet habits which include high calorie diets. These people have also conservative thinking following their own historic trend of celebrating festivals which in the long run leads to diabetes.