In a retrospective study we examined a consecutive group of diabetic patients (74 operated eyes) who underwent phacoemulsification and intraocular lens implantation over a 2 year period ending in June 1994. We compared this group with 66 diabetic eyes who underwent extracapsular surgery and lens implantation and who were examined for a previous study. There were no significant differences in progression of the retinopathy, complications, or final visual acuity. Seventy-two per cent of the phacoemulsification group improved by at least 2 lines of Snellen acuity postoperatively compared with 76% of the extracapsular group. Seventy-four per cent of the phacoemulsification group achieved an acuity of 6/12 or better compared with 68% of the extracapsular group. Overall there were fewer post-operative complications in the phacoemulsification group though there was an increased incidence of transient corneal oedema. The major cause of poor visual acuity in the phacoemulsification group was maculopathy, particularly in the presence of proliferative retinopathy in older patients. Use of a small intraocular lens did not prevent adequate fundal examination or photocoagulation. It is concluded that the outcome of cataract surgery in diabetics is largely determined by the degree of maculopathy. Phacoemulsification and extracapsular cataract surgery give similar visual results. Diabetic retinopathy should not be considered a contraindication to small-incision cataract surgery and phacoemulsification.