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Background: Relatively little is known about how depression amongst people with chronic illness is identified and managed in diverse primary health care settings. We evaluated the role of complex physical needs in influencing current practice of depression screening, documentation and antidepressant prescriptions during a 12-month period, among adults with Type 2 diabetes attending Aboriginal and Torres Strait Islander primary care health centres in Australia. Conclusions: Background levels of depression screening and documentation were low overall and significantly lower for patients with greater disease severity. Strategies to improve depression care for vulnerable populations are urgently required. An important first step in the Australian Indigenous primary care context is to identify and address barriers to the use of current clinical guidelines for depression screening and care. Methods: We analysed clinical audit data from 44 health centres participating in a continuous quality improvement initiative, using previously reported standard sampling and data extraction protocols. Eligible patients were those with Type 2 diabetes with health centre attendance within the past 12 months. We compared current practice in depression screening, documentation and antidepressant prescription between patients with different disease severity and co-morbidity. We used random effects multiple logistic regression models to adjust for potential confounders and for clustering by health centre. Results: Among the 1174 patients with diabetes included, median time since diagnosis was 7 years, 19% of patients had a co-existing diagnosis of Ischaemic Heart Disease and 1/3 had renal disease. Some 70% of patients had HbAc1>7.0%; 65% had cholesterol >4.0 mmol1-1 and 64% had blood pressure>130/80 mmHg. Documentation of screening for depression and of diagnosed depression were low overall (5% and 6% respectively) and lower for patients with renal disease (Adjusted odds ratio [AOR] 0.21; 95% confidence interval [CI] 0.14 to 0.31 and AOR 0.34; 95% CI 0.15 to 0.75), and for those with poorly controlled disease (HbA1c>7.00 (AOR 0.40; 95% CI 0.23 to 0.68 and AOR 0.51; 95% CI 0.30 to 84)). Screening for depression was lower for those on pharmaceutical treatment for glycaemic control compared to those not on such treatment. Antidepressant prescription was not associated with level of diabetes control or disease severity. Refereed/Peer-reviewed