Depression is a prevalent yet often underdiagnosed neuropsychiatric comorbidity of type 2 diabetes mellitus (T2DM), significantly complicating disease management, treatment adherence, and overall well-being. Emerging evidence suggests that gut microbiota dysbiosis plays a pivotal role in linking T2DM and depression through mechanisms such as epithelial barrier dysfunction, systemic inflammation, neurotransmitter imbalances, hypothalamic-pituitary-adrenal (HPA) axis dysregulation, and impaired neurogenesis. This review aims to explore the mechanistic pathways through which diabetes-induced dysbiosis contributes to depression and to appraise the therapeutic potential of microbiota-targeted interventions, including probiotics, prebiotics, and fecal microbiota transplantation, in mitigating depressive symptoms and improving metabolic outcomes. Understanding this gut-brain interplay may provide novel insights into therapeutic strategies for managing the dual burden of diabetes and depression.