Diabetic Retinopathy is a common complication of diabetes that is caused by changes in the blood vessels of the retina. The blood vessels in the retina get altered. Exudates are secreted, micro-aneurysms and hemorrhages occur in the retina. The appearance of these features represents the degree of severity of the disease. In this paper the proposed approach detects the presence of abnormalities in the retina using image processing techniques by applying morphological processing techniques to the fundus images to extract features such as blood vessels, micro aneurysms and exudates. These features are used for the detection of severity of Diabetic Retinopathy. It can quickly process a large number of fundus images obtained from mass screening to help reduce the cost, increase productivity and efficiency for ophthalmologists.