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Abstract Background Indigenous Australians have high rates of diabetes and its complications. This study examines ethnic differences in the management of patients with type 2 diabetes in Australian primary care. Methods Diabetes management and outcomes in Indigenous patients enrolled in the NEFRON study (n = 144) was systematically compared with that in non-Indigenous patients presenting consecutively to the same practitioner (n = 449), and the NEFRON cohort as a whole (n = 3893). Results Indigenous Australians with diabetes had high rates of micro- and macrovascular disease. 60% of Indigenous patients had an abnormal albumin to creatinine ratio compared to 33% of non-Indigenous patients (p < 0.01). When compared to non-Indigenous patients, Indigenous patients were more likely to have established macrovascular disease ((adjusted Odds ratio 2.7). This excess in complications was associated with poor glycemic control, with an HbA1c ≥ 8.0%, observed in 55% of all Indigenous patients, despite the similar frequency use of oral antidiabetic agents and insulin. Smoking was also more common in Indigenous patients (38%vs 10%, p < 0.01). However, the achievement of LDL and blood pressure targets was the same or better in Indigenous patients. Conclusion Although seeing the same doctors and receiving the same medications, glycaemic and smoking cessation targets remain unfulfilled in Indigenous patients. This cross-sectional study confirms Aboriginal ethnicity as a powerful risk factor for microvascular and macrovascular disease, which practitioners should use to identify candidates for intensive multifactorial intervention.