A system for diagnosing deterioration of a drive belt in a vehicle may include an engine, a motor connected to a shaft of a crankshaft of the engine via the drive belt to generate electric power, a controller for identifying slip of the drive belt and subsequently determining that deterioration of the drive belt is diagnosed (the “deterioration diagnosis”) or slip of the drive belt is diagnosed as being due to friction of the engine (the “slip diagnosis”) depending on whether conditions for diagnosing deterioration are fulfilled and then generating a torque adjustment command to adjust torque of the motor depending on the deterioration diagnosis or the slip diagnosis, and a main battery for supplying electric power to the motor in response to the torque adjustment command.