Abstract: Objective To investigate the collective influence of sarcopenia on the extended prognosis of hospitalized elderly individuals with Type 2 Diabetes Mellitus (T2DM). Methods Patients with T2DM aged 65 years and older, who were admitted to the Geriatrics Department of Peking Union Medical College Hospital between January 2017 and January 2021, were consecutively enrolled in the study. The presence of sarcopenia was evaluated based on the diagnostic criteria established by the Asian Working Group for Sarcopenia (AWGS) in 2014. Additionally, assessments were made on the patients' comorbidities, functional status, nutritional status, and geriatric syndromes. Follow-up was conducted through outpatient visits and telephone calls to monitor outcomes such as severe disability, rehospitalization, and all-cause mortality. Cox regression analysis was performed to investigate the impact of concurrent sarcopenia on the long-term prognosis of elderly individuals with T2DM who were hospitalized. Results A total of 244 elderly inpatients with T2DM who met specific criteria were included in the study, comprising 110 males (45.1%) and 134 females (54.9%), with ages ranging from 65 to 93 years and a median age of 74 years. Over a follow-up period of 3 to 7 years (median 5.6 years), sarcopenia was observed in 25.4% (62/244) of patients. Elderly T2DM patients with sarcopenia exhibited significantly higher rates of severe disability, rehospitalization, and all-cause death compared to those without sarcopenia (all P<0.001). Cox regression analysis, adjusting for gender, age, and comorbidities, revealed that sarcopenia was a significant predictor of severe disability (HR=4.693, 95% CI: 1.253-17.579, P=0.022), rehospitalization (HR=1.755, 95% CI: 1.053-2.926, P=0.031), and all-cause death (HR=2.255, 95% CI: 1.078-4.713, P=0.031). Additionally, the age-adjusted Charlson comorbidity index emerged as an independent risk factor for all-cause death (HR=1.237, 95% CI: 1.046-1.464, P=0.013). Conclusions The prevalence of sarcopenia is notably high among hospitalized elderly patients with T2DM, greatly affecting their long-term prognosis. It is imperative for clinicians to prioritize screening and implementing interventions for sarcopenia in elderly T2DM patients to improve their quality of life and overall prognosis.