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Diabetic Retinopathy is a severe eye disease caused due to chronic diabetes. The project aims at developing a novel solution for easy diagnosis of Diabetic Retinopathy, which is a serious condition prevailing among the diabetic patients. The literature study reveals that, direct inspection of retinal image captured by fundus camera is not sufficient for the diagnosis of diabetic retinopathy at initial stages and also requires periodic screening which is a time consuming process. Instead if the image is processed and relevant parameters such as hard exudates are detected based on its features like sharp edges and color are highlighted by the implementation of image processing techniques and the graphical user interface created using MATLAB 7.8, will aid the physicians in quick examination. The methodology involves extraction of optic disc (OD) which is a feature found in retina is carried out as a initial stage of extracting hard exudates which is followed by detection of yellowish objects and sharp edged objects. Finally each process involved in detecting hard exudates take up a icon in a single window called Graphical User Interface(GUI) window which will be an exclusive window for detecting hard exudates. The processed resultant image can be examined comfortably at its earlier stages and thus reducing the examining time.