Our study aimed to assess the role of a hand-held fundus camera and artificial intelligence (AI)-based grading system in diabetic retinopathy (DR) screening and determine its diagnostic accuracy in detecting DR compared with clinical examination and a standard fundus camera. This cross-sectional instrument validation study, as a part of the International Diabetes Federation (IDF) Diabetic Retinopathy Screening Project, included 160 patients (320 eyes) with type 2 diabetes (T2DM). After the standard indirect slit-lamp fundoscopy, each patient first underwent fundus photography with a standard 45° camera VISUCAM Zeiss and then with a hand-held camera TANG (Shanghai Zhi Tang Health Technology Co., Ltd.). Two retina specialists independently graded the images taken with the standard camera, while the images taken with the hand-held camera were graded using the DeepDR system and an independent IDF ophthalmologist. The three screening methods did not differ in detecting moderate/severe nonproliferative and proliferative DR. The area under the curve, sensitivity, specificity, positive predictive value, negative predictive value, positive likelihood ratio, negative likelihood ratio, kappa (ĸ) agreement, diagnostic odds ratio, and diagnostic effectiveness for a hand-held camera compared to clinical examination were 0.921, 89.1%, 100%, 100%, 91.4%, infinity, 0.11, 0.86, 936.48, and 94.9%, while compared to the standard fundus camera were 0.883, 83.2%, 100%, 100%, 87.3%, infinity, 0.17, 0.78, 574.6, and 92.2%. The results of our study suggest that fundus photography with a hand-held camera and AI-based grading system is a short, simple, and accurate method for the screening and early detection of DR, comparable to clinical examination and fundus photography with a standard camera.