Background Ankle fractures are a very common orthopedic trauma. One in eight patients undergoing ankle fixation is diabetic. Most of these patients also have additional comorbidities including peripheral arterial disease and diabetic neuropathy. Therefore, on one hand surgical intervention can pose challenges for wound healing and risk of infection, but non-operative management increases the risk for loss of reduction and therefore stresses the condition of the surrounding soft tissue. The aim of this work was to observe the radiological and functional outcome of arthroscopic ankle fusion in diabetic ankle fractures. Methods This prospective study was carried out on 20 patients, both sexes, with clinical criteria of displaced ankle fractures in diabetics, adults, closed ankle fractures, isolated trauma, diabetic patients with neuropathy and Adelaide Fracture in the Diabetic Ankle score more than or equal 5. Results Fourteen cases had solid bony union at a mean of 27.2 weeks while six cases had stable ankles with stiff fibrous nonunion at the end of the follow up period. Two of which had a breakage of distal locking screws. However, stiff fibrous nonunion of tibio-talar joint with the foot in a stable plantigrade position was considered satisfactory and no further intervention was advised. Our limb salvage rate was 100%. No below knee amputation was done. Conclusions Ankle fractures in diabetic patients are increasingly frequently encountered in comorbid patients with suboptimal overlying soft tissue integrity. Arthroscopic assisted ankle fusion can be considered a valid primary definitive treatment option to help reduce the potential perioperative soft tissue insult and associated complications. Utilizing an arthroscopic-assisted approach to this procedure is of added benefit in allowing for articular preparation and thereby reducing the risk of non-union while also minimizing additional extensive soft tissue insult in patients with underlying soft tissue compromise.