Abstract: Diabetic Retinopathy [DR] is an eye disorder caused by changes in the blood vessels of the retina. It is one of the major problems that lead to blindness in adults around the world today. Early detection of the disease is absolutely essential in preventing unnecessary blindness. So, we have proposed an automated system to detect diabetic retinopathy from retinal images. In this approach after pre-processing, texture features are extracted from retinal images to detect abnormal images. Then the abnormal images are processed to localize and identify the problem of exudates and haemorrhages.