We compared digital retinal images and 35 mm colour transparencies taken with the Canon CR5 retinal camera for the detection and grading of diabetic retinopathy in a clinical setting, in a randomized, blinded study of diabetic patients with a spectrum of severity of diabetic retinopathy. Forty patients were photographed, giving a total of 75 eyes including non-diabetic eyes as controls. Images were graded according to the validated European guidelines. There was exact agreement between grades obtained from both the 2 field 45 degrees 35 mm colour transparencies and digital images in 93.3% (70/75) of eyes, with Cohen's Kappa statistic for the comparison being 0.92. Overall, when grading from the digital images 5.3% (4/75) eyes were undergraded with three cases of sight threatening diabetic retinopathy (STDR) graded as non-sight threatening (NSTDR) (3/48, 6.3%). One eye was overgraded (1/75, 1.3%). Two of the three cases of STDR undergraded as NSTDR had small numbers of intra-retinal microvascular abnormalities (IRMA) discernible on the colour transparencies but which were not visible from the digital image. The third had multiple small cotton wool spots graded as laser photocoagulation scars from the digital images. In conclusion there is good to excellent agreement between retinopathy grades using the Canon CR5 digital retinal imaging system compared to 35 mm colour transparencies.