Purpose To assess the accuracy and reliability of smartphone ophthalmoscopy, we compared the ability of a smartphone ophthalmoscope with that of a slit-lamp biomicroscope to grade diabetic retinopathy (DR) in patients with diabetes mellitus (DM). Design Clinical-based, prospective, comparative instrument study. Methods This comparative clinical study was performed in 120 outpatients (240 eyes) with type 1 or type 2 DM. After pupil dilation, the patients underwent smartphone ophthalmoscopy with the D-Eye device, followed by dilated retinal slit-lamp examination, to grade DR according to a 5-step scale. Results Overall exact agreement between the 2 methods was observed in 204 of 240 eyes (85%) (simple κ = 0.78; CI 0.71-0.84) and agreement within 1 step was observed in 232 eyes (96.7%). Compared to biomicroscopy, the sensitivity and specificity of smartphone ophthalmoscopy for the detection of clinically significant macular edema were 81% and 98%, respectively. Smartphone ophthalmoscopy and biomicroscopy could not be used to examine the fundus and grade DR in 9 eyes (3.75%) and 4 eyes (1.7%), respectively, because of cataract and/or small pupil diameter. Conclusion Smartphone ophthalmoscopy showed considerable agreement with dilated retinal biomicroscopy for the grading of DR. The portability, affordability, and connectivity of a smartphone ophthalmoscope make smartphone ophthalmoscopy a promising technique for community screening programs.