Diabetes mellitus is a common chronic condition worldwide, especially in the elderly population. Several epidemiologic studies in the last 2 years have consistently associated diabetes with physical disability, a condition that may profoundly affect the quality of life of older people. Although in older people with diabetes, the pathogenesis of functional limitation and disability has not been completely elucidated, it is certainly complex and involves multiple potential pathways. In this narrative review, we described the most recent epidemiologic and clinical evidence supporting the association between diabetes and impaired physical function in older persons focusing on emerging biological mechanisms explaining the excess risk of disability associated with diabetes.