Diabetes mellitus is one of the most debilitating diseases, diabetic neuropathy happens to be the most common and perhaps the most serious complication of diabetes mellitus, often leading to morbidity and mortality. A 60 year old female presented with disorientation, history of vomiting, shortness of breath, respiratory failure initially. Blood reports revealed that she was positive for ketone bodies with elevated HbA1c and general random blood sugar. Chest radiogram revealed atelectasis of the right lung with prominent involvement of right middle and lower lobes. High-resolution computed tomography of chest confirmed the findings and unilateral diaphragmatic paralysis due to phrenic nerve neuropathy due to undetected type 2 diabetes was diagnosed. Although phrenic nerve paralysis is a rare occurrence with diabetes, the possibility shouldn't be overlooked as a presentation of diabetes mellitus.