The global pandemic of the novel Coronavirus infection 2019 (COVID-19) challenged the care of comorbid patients. The risk imposed by COVID-19 on diabetes patients is multisystemic, exponential, and involves glucose dysregulation. The increased burden for diabetes patients infected with COVID-19 is substantial in countries with a high prevalence of diabetics, such as the United Arab Emirates (UAE). This study aims to explore the prevalence of diabetes, clinical characteristic, and outcomes of patients admitted for COVID-19 treatment with or without a concurrent preadmission diagnosis of diabetes. A prospective study was performed on 1199 adults admitted with confirmed COVID-19 from December 2020 to April 2021 to a single hospital in the UAE. The study compared the demographics, clinical characteristics, and outcomes in COVID-19-infected patients with diabetes to patients without diabetes. The study endpoints include the development of new-onset diabetes, admission to ICU, trends in the blood glucose levels, and death. A total of 1199 patients (390 with diabetes) were included in the study. A diabetes prevalence was detected among 9.8% of the study population. Among the diabetes group, 10.8% were morbidly obese, 65.4% had associated hypertension, and 18.9% had coronary artery disease. Diabetes patients showed higher rates of ICU admission (11.1% vs. 7.1%), NIV requirement (9.6% vs. 6.4%), and intubation (5.45% vs. 2%) compared to the non-diabetes group. Advanced age was a predictor of a worsening COVID-19 course, while diabetes (p < 0.050) and hypertension (p < 0.025) were significant predictors of death from COVID-19. Nearly three-fourths (284 (73.4%)) of the diabetic patients developed worsened hyperglycemia as compared to one-fifth (171 (20.9%)) of the nondiabetic patients. New-onset diabetes was detected in 9.8% of COVID-19 patients. COVID-19 severity is higher in the presence of diabetes and is associated with worsening hyperglycemia and poor clinical outcomes. Preexisting hypertension is a predictor of COVID-19 severity and death.