Objective: To compare the efficacy and safety of cilnidipine and losartan in hypertensive patients with type 2 diabetes mellitus (type 2 DM). Materials and Methods: In this observational, prospective study, hypertensive patients with type 2 DM receiving cilnidipine and losartan were included. Demographic details, clinical history, serum potassium, and urinary albumin were recorded in a case record form. Patients were followed up every monthly up to 24 weeks and observed for clinical and laboratory parameters and adverse drug reactions (ADRs). Data were analyzed using paired t‑test, unpaired t‑test, and Fisher’s exact test. Results: Out of 114 patients, 59 received cilnidipine and 55 patients received losartan. By 24 weeks, both cilnidipine and losartan significantly (P < 0.01) improved mean blood pressure and urinary albumin. However, mean decrease in urinary albumin was significant (P < 0.005) with cilnidipine (20.6 ± 20.4 mg/day) as compared to losartan (18.3 ± 14.3 mg/day). Mean serum potassium was increased significantly (P < 0.05) in patients treated with losartan (0.9 ± 2.8) as compared to patients treated with cilnidipine. A total of 19 ADRs were observed in both groups and out of these, 36.8% ADRs were caused by cilnidipine and 63.2% ADRs by losartan. Conclusion: Cilnidipine is equally effective as losartan in reducing blood pressure in hypertensive patients with type 2 DM. However, cilnidipine is more effective in the prevention of albuminuria and better tolerated by patients as compared with losartan.