Abstract Background Diabetes has become a significant risk factor for COVID-19-related severe illness and death. Methods This was a retrospective cohort study of 104 patients, with or without type 2 (diabetes mellitus) DM, diagnosed with COVID-19 between June and September 2021 in Benha University Hospital, Egypt. Outcome measures including discharge after recovery, transfer to ICU and intubation, or death were recorded. Univariate and multivariate logistic regression analysis was done for the prediction of death in diabetic patients. Results Length of hospital stay was significantly higher in diabetic (median 15 days) compared to non-diabetic patients (median 10 days). ICU admission and intubation among diabetic patients were substantially higher than non-diabetics. Univariate regression analysis established that old age (p = 0.02: OR = 1.03: CI 1.00–1.07), multiple comorbidities (p = 0.005: OR = 8.66: CI 1.9–38.5), diabetic complications (p = 0.000: OR = 6.401:CI 2.5–16.3), HbA1c (p = 0.01: OR = 1.22: CI 1.04–1.43), length of hospital stay (p = 0.005: OR = 1.07: CI 1.02–1.12), and ICU admission (p = 0.00: OR = 44.1: CI 9.4–205.3) were predictors of death for diabetic patients as well as neutrophilic count, D-dimer, and CRP levels. Multivariate regression analysis concluded that ICU admission was the most significant predictor of death in diabetic patients. Conclusion Type 2 DM patients, infected with the COVID-19 virus exhibited more admission to ICU and intubation with longer hospital stays compared to those without diabetes with a similar death rate. Old age, HbA1C, comorbidities, diabetic complications, length of hospital stay and ICU admission, and inflammatory parameters were significant predictors of death in diabetic patients.