(1) Background: Sarcopenia has gained much interest in recent years due to an increase in morbidity. Sarcopenia is associated with type 2 diabetes mellitus (T2DM) and vice versa. There is a paucity of information regarding the prevalence and predictors of sarcopenia among T2DM individuals. The aim of the present study was to determine the prevalence and predictors of sarcopenia among T2DM individuals. (2) Methods: This study included 159 diabetics (cases) and 79 non-diabetics (controls) aged >50 years. The subjects were assessed for demographic and anthropometric parameters. Sarcopenia (according to the Asian Working Group for Sarcopenia 2019 criteria) was assessed using Jammer's hydraulic dynamometer for handgrip strength, dual-energy X-ray absorptiometry for muscle mass, and 6m gait speed. The biochemical investigations included glycated hemoglobin; fasting and prandial glucose; fasting insulin; lipid, renal, liver, and thyroid profiles; serum calcium; phosphorous; vitamin D; and parathyroid hormone (PTH). Appropriate statistical methods were used to determine the significance of each parameter, and a multivariate regression analysis was applied to determine the predictors. (3) Results: The prevalence of sarcopenia was significantly higher among the cases than the controls (22.5% vs. 8.86%, p-0.012). Body mass index (BMI) (OR-0.019, CI-0.001-0.248), physical activity (OR-0.45, CI-0.004-0.475), serum calcium levels (OR-0.155, CI-0.035-0.687), hypertension (OR-8.739, CI-1.913-39.922), and neuropathy (OR-5.57, CI-1.258-24.661) were significantly associated with sarcopenia following multivariate regression analysis. (4) Conclusions: T2DM individuals are prone to sarcopenia, especially those with a low BMI, low physical activity, hypertension, neuropathy, and low serum calcium levels. Hence, by modifying these risk factors among the elderly T2DM, sarcopenia can be prevented.