Natural products in the form of functional foods have become increasingly popular due to their protective effects against life-threatening diseases, low risk of adverse effects, affordability, and accessibility. Plant components such as phytosterol, in particular, have drawn a lot of press recently due to a link between their consumption and a modest incidence of global problems, such as Type 2 Diabetes mellitus (T2DM), cancer, and cardiovascular disease. In the management of diet-related metabolic diseases, such as T2DM and cardiovascular disorders, these plant-based functional foods and nutritional supplements have unquestionably led the market in terms of cost-effectiveness, therapeutic efficacy, and safety. Diabetes mellitus is a metabolic disorder categoriszed by high blood sugar and insulin resistance, which influence major metabolic organs, such as the liver, adipose tissue, and skeletal muscle. These chronic hyperglycemia fallouts result in decreased glucose consumption by body cells, increased fat mobilisation from fat storage cells, and protein depletion in human tissues, keeping the tissues in a state of crisis. In addition, functional foods such as phytosterols improve the body’s healing process from these crises by promoting a proper physiological metabolism and cellular activities. They are plant-derived steroid molecules having structure and function similar to cholesterol, which is found in vegetables, grains, nuts, olive oil, wood pulp, legumes, cereals, and leaves, and are abundant in nature, along with phytosterol derivatives. The most copious phytosterols seen in the human diet are sitosterol, stigmasterol, and campesterol, which can be found in free form, as fatty acid/cinnamic acid esters or as glycosides processed by pancreatic enzymes. Accumulating evidence reveals that phytosterols and diets enriched with them can control glucose and lipid metabolism, as well as insulin resistance. Despite this, few studies on the advantages of sterol control in diabetes care have been published. As a basis, the primary objective of this review is to convey extensive updated information on the possibility of managing diabetes and associated complications with sterol-rich foods in molecular aspects.