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Automated image processing has the potential to assist in the early detection of diabetes, by detecting changes in optic disk diameter and area in the retina images. This paper describes a new method for localization of the optic disk boundary of retinal images. The optic disk is the region on the retina at which optic nerve axons enter and leave the eye. Our method includes a combination of the watershed transform and the active contours called "watersnake". To detect the initial contour we used the watershed transform and finally the optic disk boundary was determined using an active contours, our method could form the basis of a quick and accurate test for diabetic retinopathy which would have hug benefits it terms of improved access to screening people for risk or presence of diabetes. Results obtained by applying these are presented.