Background: Urinary tract infection (UTI) is a common problem in diabetic and non-diabetic patients; if it is unrecognized or not treated properly on time can cause considerable morbidity and mortality. The aim of this study is to describe the pattern of bacteria causing UTI in clinically diagnosed diabetic and non-diabetic patients and their antimicrobial susceptibility pattern. Methods: A hospital laboratory based cross-sectional study was conducted among the diabetic and non-diabetic patients with UTI visiting in Alka Hospital, Lalitpur from September to November 2013. Urine culture, blood sugar test and antibiotics susceptibility test was performed following standard laboratory protocols. Results: Altogether 1172 midstream urine samples were collected, 330 samples from diabetic and 842 samples from non-diabetic patients. There were 33.6% and 12.0% urine culture positive among diabetic and non-diabetic patients respectively. E. coli was found to be the most predominant organism causing UTI in both groups of patients; nitrofurantoin and gentamycin were found most effective against gram negative bacteria. Among the total E. coli isolates, there were 60.6% and 57.6% multi drug resistant strain among diabetic and non- diabetic patients with UTI. Conclusions: Diabetic patients are relatively at higher risk of UTI in comparision to the non-diabetic patients. E. coli was the most predominant organism causing UTI. Multi drug resistant strain of E. coli in both groups of patients with UTI was s significant problem and it is a serious issue now.