Several low and middle-income countries are implementing electronic health records (EHR). In the near future, EHRs could become an efficient tool to evaluate healthcare performance if appropriate indicators are developed. The aims of this study are: a) to develop quality of care indicators (QCIs) for type 2 diabetes (T2DM) in the Mexican Institute of Social Security (IMSS) health system; b) to determine the feasibility of constructing QCIs using the IMSS EHR data; and c) to evaluate the quality of care (QC) provided to IMSS patients with T2DM. We used a three-stage mixed methods approach: a) development of QCIs following the RAND-UCLA method; b) EHR data extraction and construction of indicators; c) QC evaluation using EHR data from 25,130 T2DM patients who received care in 2009. We developed 18 QCIs, of which 14 were possible to construct using available EHR data. QCIs comprised both process of care and health outcomes. Several flaws in the EHR design and quality of data were identified. The indicators of process and outcomes of care suggested areas for improvement. For example, only 13.0% of patients were referred to an ophthalmologist; 3.9% received nutritional counseling; 63.2% of overweight/obese patients were prescribed metformin, and only 23% had HbA1c