Aim To determine factors associated with progression to referable diabetic retinopathy in people with type 2 diabetes in the Republic of Ireland. Research design and methods The study was conducted in a dynamic cohort of 2770 people with type 2 diabetes, recruited between April 2005 and July 2013. Systemic factors (systolic and diastolic blood pressure, HbA1c, lipid levels, BMI) and baseline diabetic retinopathy grading results were evaluated at 4‐monthly and yearly intervals, respectively. Associations between risk factors (most recently recorded value, and rate of change in value between pairs of consecutive systemic evaluations) and development of referable diabetic retinopathy were estimated using Cox proportional hazards models. Results There was a fourfold increased risk of progression to referral when retinopathy was present at baseline vs no retinopathy at baseline (hazard ratio 4.02, 95% CI 2.80–5.78; P<0.001). Higher current values of HbA1c (hazard ratio 1.22, 95% CI 1.11–1.34; P<0.001), systolic blood pressure (hazard ratio 1.29, 95% CI 1.15–1.45; P<0.001) and triglycerides (hazard ratio 1.10, 95% CI 1.03–1.18; P=0.004) were associated with increased risk of referral. Higher current BMI (hazard ratio 0.83, 95% CI 0.73–0.95; P=0.007) and diastolic blood pressure (hazard ratio 0.91, 95% CI 0.85–0.97; P=0.006) were associated with reduced risk of referral. Conclusions Presence of retinopathy at baseline was strongly associated with increased risk of referral. Modest associations between systemic factors and risk of progression to referable retinopathy were detected.