To compare nonmydriatic and mydriatic handheld retinal imaging with standard ETDRS 7-field color fundus photography (ETDRS photos) for the assessment of diabetic retinopathy (DR) and diabetic macular edema (DME). Prospective, comparative, instrument validation study SUBJECTS: 225 eyes from 116 patients with diabetes mellitus METHODS: Following a standardized protocol, nonmydriatic and mydriatic images were acquired using handheld retinal cameras [Nonmydriatic (NM): Aurora (AUNM), Smartscope (SSNM), RetinaVue-700 (RVNM); Mydriatic (MD): Aurora (AUMD), Smartscope (SSMD), RetinaVue-700 (RVMD), iNview (NVMD)] and dilated ETDRS photos. Grading was performed at a centralized reading center using the International Clinical Classification for DR and DME. Kappa statistics [simple (K), weighted (Kw)] assessed the level of agreement for DR and DME. Sensitivity and specificity were calculated for any DR, referable DR (refDR) and vision-threatening DR (vtDR). Agreement for DR and DME, sensitivity and specificity for any DR, refDR and vtDR, ungradable rates RESULTS: Severity by ETDRS photos: no DR 33.3%, mild NPDR 20.4%, moderate 14.2%, severe in 11.6%, proliferative DR 20.4%; no DME 68.0%, DME 9.3%, ciDME 17.3%, ungradable 5.3%. For nonmydriatic handheld retinal imaging, Kw was 0.70 to 0.73 for DR and 0.76 to 0.83 for DME. For mydriatic handheld retinal imaging, Kw was 0.68 to 0.75 for DR and 0.77 to 0.91 for DME. Thresholds for sensitivity (0.80) and specificity (0.95) were met by SSNM, AUMD and RVMD for anyDR, and by AUMD and RVMD for refDR. Thresholds for sensitivity and specificity were met by AUMD and RVMD for DME. Nonmydriatic and Mydriatic ungradable rate for DR was 15.1% to 38.3% and 0% to 33.8%, respectively. Following standardized protocols, nonmydriatic and mydriatic handheld retinal imaging devices have substantial agreement levels for DR and DME. With mydriasis, not all handheld retinal imaging devices meet standards for sensitivity and specificity in identifying any DR and refDR. None of the handheld devices met the established 95% specificity for vtDR, suggesting that lower referral thresholds should be used if handheld devices must be utilized. When using handheld devices, the ungradable rate is significantly reduced with mydriasis and DME sensitivity thresholds are only achieved following dilation.