(1) Background: Diabetic retinopathy (DR) can cause blindness. Current guidelines on diabetic eye care recommend more frequent eye examinations for more severe DR to prevent deterioration. However, close follow-up and early intervention at earlier stages are important for the prevention of disease progression of other diabetes mellitus (DM) complications. The study was designed to investigate the association between different stages of DR in type 2 DM patients and the progression of DR; (2) Methods: A total of 2623 type 2 DM patients were included in this study. In these patients, a total of 14,409 fundus color photographs was obtained. The primary outcome was the progression of DR; (3) Results: The progression of DR was highly associated with the initial grade of DR (p < 0.001). Severe nonproliferative diabetic retinopathy (NPDR) was the most likely to progress to proliferative diabetic retinopathy (PDR), followed by moderate NPDR, mild NPDR, and no retinopathy. However, progression to the next stage of DR showed a different trend. We used no retinopathy as a reference. Mild NPDR showed the highest risk for progression to the next stage [hazard ratio (HR): 2.00 (95% conference interval (CI): 1.72–2.32)] relative to higher initial grades [HR (moderate NPDR): 1.82 (95% CI: 1.58–2.09) and HR (severe NPDR): 0.87 (95% CI: 0.69–1.09)]. The same trend was observed in the multivariate analysis, in which mild NPDR presented the highest risk for progression to the next stage (adjusted HR (mild NPDR): 1.95 (95% CI: 1.68–2.27), adjusted HR (moderate NPDR): 1.73 (95% CI: 1.50–1.99), and adjusted HR (severe NPDR): 0.82 (95% CI: 0.65–1.03)); (4) Conclusions: Type 2 diabetic patients with earlier-grade DR appeared to exhibit more rapid development to the next grade in our study. As these findings show, more frequent fundus color photography follow-up in earlier-grade DR patients is important to slow DR progression and awaken self-perception.