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Background Type 2 diabetes mellitus (T2DM) and thyroid dysfunction are common endocrine disorders. Thyroid hormones play an important role in glucose metabolism, insulin secretion, and insulin sensitivity. Disturbances in thyroid function may worsen glycemic control and increase the risk of diabetic complications. This study aimed to determine the prevalence of thyroid dysfunction in patients with T2DM and evaluate its impact on glycemic control. Methods This cross-sectional study was conducted at Nawaz Sharif Medical College/Aziz Bhatti Shaheed Teaching Hospital, Gujrat, Pakistan, from January to June 2025. A total of 260 patients with T2DM were enrolled through consecutive sampling. After exclusion of incomplete records, 252 patients were included in the final analysis. Demographic and clinical data were collected through interviews and medical records. Fasting blood glucose, glycated hemoglobin (HbA1c), thyroid-stimulating hormone (TSH), free triiodothyronine (FT3), and free thyroxine (FT4) were measured. Data were analyzed using IBM SPSS Statistics for Windows, Version 26 (Released 2019; IBM Corp., Armonk, New York). Results Among 252 participants, 68 (27.0%) had thyroid dysfunction while 184 (73.0%) were euthyroid. Subclinical hypothyroidism was the most common abnormality, affecting 15.1% of patients. Patients with thyroid dysfunction had significantly higher fasting blood glucose levels (189.7 ± 49.6 vs. 161.4 ± 42.8 mg/dL, p<0.001) and HbA1c levels (9.1 ± 1.7 vs. 7.8 ± 1.4%, p<0.001) compared to euthyroid patients. Poor glycemic control (HbA1c ≥7%) was more common in patients with thyroid dysfunction (83.8% vs. 58.7%, p<0.001). Multivariable logistic regression showed that thyroid dysfunction was independently associated with poor glycemic control (adjusted OR=2.74, 95% CI: 1.41-5.33, p=0.003). Conclusion Thyroid dysfunction is common among patients with T2DM and is associated with poor glycemic control. Routine thyroid screening may help identify high-risk patients and improve diabetes management.