The incidence and prevalence of metabolic and musculoskeletal diseases are increasing. Type 2 diabetes mellitus (T2DM) is characterized by insulin resistance, inflammation, advanced glycation end-product accumulation and increased oxidative stress. These characteristics can negatively affect various aspects of muscle health, including muscle mass, strength, quality and function through impairments in protein metabolism, vascular and mitochondrial dysfunction, and cell death. Sarcopenia is a term used to describe the age-related loss in skeletal muscle mass and function and has been implicated as both a cause and consequence of T2DM. Sarcopenia may contribute to the development and progression of T2DM through altered glucose disposal due to low muscle mass, and also increased localized inflammation, which can arise through inter- and intramuscular adipose tissue accumulation. Lifestyle modifications are important for improving and maintaining mobility and metabolic health in individuals with T2DM and sarcopenia. However, evidence for the most effective and feasible exercise and dietary interventions in this population is lacking. In this review, we discuss the current literature highlighting the bidirectional relationship between T2DM and sarcopenia, highlight current research gaps and treatments, and provide recommendations for future research.