Diabetes is a metabolic disorder comprising of high glucose level in blood over a prolonged period in the body as it is not capable of using it properly. The severe complications associated with diabetes include diabetic ketoacidosis, nonketotic hypersmolar coma, cardiovascular disease, stroke, chronic renal failure, retinal damage and foot ulcers. There is a huge increase in the number of patients with diabetes globally and it is considered a major health problem worldwide. Early diagnosis of diabetes is helpful for treatment and reduces the chance of severe complications associated with it. Machine learning algorithms (such as ANN, SVM, Naive Bayes, PLS-DA and deep learning) and data mining techniques are used for detecting interesting patterns for diagnosing and treatment of disease. Current computational methods for diabetes diagnosis have some limitations and are not tested on different datasets or peoples from different countries which limits the practical use of prediction methods. This paper is an effort to summarize the majority of the literature concerned with machine learning and data mining techniques applied for the prediction of diabetes and associated challenges. This report would be helpful for better prediction of disease and improve in understanding the pattern of diabetes. Consequently, the report would be helpful for treatment and reduce risk of other complications of diabetes.