Diabetes mellitus is emerging as one of the major public health threats that contributed to 2% of all deaths in Tanzania in 2016. Although adequate knowledge related to diabetes mellitus is associated with early case detection, prevention, and minimization of health complications and socioeconomic-related consequences, there is less evidence about the adequacy of the community´s knowledge of diabetes in Tanzania. This study aimed to determine knowledge about diabetes mellitus and its associated factors among diabetic outpatients. A cross-sectional study was conducted among 220 diabetic outpatients aged 18 years and above at Muhimbili national hospital in Tanzania between February and April 2017. Data were collected using a structured pretested questionnaire and were entered into Microsoft Excel and exported to SPSS Version 20 for analysis. Bivariate and multivariate logistic regression was used to determine the predictive variables. The significance of independent variables was declared at a 95% confidence level and p-value < 0.05. A total of 137 (64.01%) of the participants had adequate knowledge about diabetes mellitus. The majority (86.9% and 85.1%) reported having adequate knowledge of complications of diabetes and treatment options for diabetes respectively. The least level of knowledge reported was on signs and symptoms (48.6%) and type of diabetes (32.7%). The majority (54%) cited health facilities as the most common sources of information related to diabetes. Both bivariate and multivariate logistic regression analyses showed that there was a statistical association between knowledge related to diabetes and the level of education of study participants. The overall level of knowledge of participants about diabetes mellitus was adequate, with a low level of knowledge related to signs and symptoms of diabetes, and type of diabetes. Health facilities were the most common sources of information related to diabetes. Policy and decision-makers and health care providers should take collective action to improve community knowledge about diabetes. Health education related to diabetes should be integrated into the educational curriculum at all levels in Tanzania, which would massively increase awareness of diabetes.