Objective: To evaluate the impact of diabetes on tuberculosis treatment efficacy by identifying factors influencing differing outcomes between diabetic and non-diabetic patients and offering insights for optimizing treatment protocols for diabetic individuals. Methodology: A prospective observational study was conducted and total of 286 hospitalized adult patients aged 18 years and older, newly diagnosed with pulmonary tuberculosis (PTB) and/or diabetes mellitus (DM), were included in the study. TB diagnosis was confirmed through sputum smear microscopy, culture, and cartridge-based nucleic acid testing, while DM was diagnosed based on fasting plasma glucose (FBS) levels ≥126 mg/dl or HbA1c levels ≥6.5%. Patients were classified based on their TB diagnosis (PTB or extrapulmonary TB [EPTB]) and their diabetic status. The treatment outcomes were categorized as "cured," "treatment completed," "defaulter," "treatment failure," or "lost to follow-up." Data were analysed using descriptive statistics, chi-square tests, and Mann-Whitney U-tests, with fasting glucose and HbA1c levels monitored at baseline, three months, and six months post-treatment. Results: The study revealed significant differences in treatment outcomes between diabetic and non-diabetic TB patients. The cure rate was considerably higher in non-diabetic patients (72.8%) compared to those with diabetes (55.5%). Diabetic patients exhibited higher rates of treatment failure (8.1%), defaulters (5.7%), and those lost to follow-up (10.4%) compared to their non-diabetic counterparts. Overall, non-diabetic patients had more favourable outcomes (88.4%) than diabetic patients (75.8%). Furthermore, patients with pulmonary TB (PTB) had significantly higher fasting blood sugar and HbA1c levels at baseline compared to those with extrapulmonary TB (EPTB), but both groups experienced marked improvements in glucose control following TB treatment, with more pronounced changes in the PTB group. Conclusion: The study underscores the negative impact of diabetes on tuberculosis treatment outcomes. Diabetic TB patients exhibited slower recovery rates, higher treatment failure rates, and a greater likelihood of discontinuing treatment or being lost to follow-up. These findings highlight the need for integrated TB and diabetes management strategies to improve treatment success. Close monitoring of glycaemic control and personalized treatment approaches are critical for optimizing outcomes in diabetic TB patients, ultimately contributing to better health and reducing the global burden of both diseases.