Background: Hepatic encephalopathy (HE) is one of the leading consequences among patients with cirrhotic liver, which influence more than 35% of these patients. It was established that more than 95% of cirrhotic patients were associated with glucose intolerance and approximately 33% of them had type 2 diabetes mellitus (DM). This investigation was conducted to evaluate the possible association between DM and the development of HE. Objective: this study was designed to examine the association of DM with the prevalence and severity of HE in Egyptian patients with decompensated cirrhosis. Patients and methods: This study was carried out prospectively on 100 patients presented with HE. Those further had been classified into diabetic (60 patients group 1) and non-diabetic (40 patients group 2). All patients in this study were subjected to a thorough assessment of history taking, thorough physical examination, laboratory investigations including complete blood picture, kidney and liver function tests, viral HBsAg and HCVAb, serum sodium, potassium, calcium and magnesium, serum ammonia levels, fasting and glycosylated hemoglobin (HbA1C %) and abdominal ultrasonography. Results: Diabetic patients showed a higher incidence of Grades, III, and IV of HE compared to the non-diabetic group with p value < 0.0001 for each grade. Furthermore, there was a statistically significant difference between both groups regarding the Child-Pough classification. A statistically significant positive correlations between fasting blood sugar level, and glycosylated hemoglobin with HE grades (r = 0.430 and p =0.0006), (r = 0.314, p = 0.0145) respectively among diabetic patients group 1. Conclusions: Egyptian diabetic patients have a potential risk of developing HE among cirrhotic liver patients relative to non-diabetic patients.