Diabetic muscle atrophy is an inflammation-related complication of type-2 diabetes mellitus (T2DM). Even though regular exercise prevents further deterioration of atrophic status, there is no effective mediator available for treatment and the underlying cellular mechanisms are less explored. In this study, we investigated the therapeutic potential of MCC950, a specific, small-molecule inhibitor of NLRP3, to treat pyroptosis and diabetic muscle atrophy in mice. Furthermore, we used MCC950 to intervene in the protective effects of aerobic exercise against muscle atrophy in diabetic mice. Blood and gastrocnemius muscle (GAS) samples were collected after 12 weeks of intervention and the atrophic state was assessed. We initially corroborated a diabetic muscle atrophy phenotype in db/db mice (D) by comparison with control m/m mice (W) by examining parameters such as fasting blood glucose (D vs. W: 24.47 ± 0.45 mmol L−1 vs. 4.26 ± 0.6 mmol L−1, p < 0.05), grip strength (D vs. W: 166.87 ± 15.19 g vs. 191.76 ± 14.13 g, p < 0.05), exercise time (D vs. W: 1082.38 ± 104.67 s vs. 1716 ± 168.55 s, p < 0.05) and exercise speed to exhaustion (D vs. W: 24.25 ± 2.12 m min−1 vs. 34.75 ± 2.66 m min−1, p < 0.05), GAS wet weight (D vs. W: 0.07 ± 0.01 g vs. 0.13 ± 0.01 g, p < 0.05), the ratio of GAS wet weight to body weight (D vs. W: 0.18 ± 0.01% vs. 0.54 ± 0.02%, p < 0.05), and muscle fiber cross-sectional area (FCSA) (D vs. W: 1875 ± 368.19 µm2 vs. 2747.83 ± 406.44 µm2, p < 0.05). We found that both MCC950 (10 mg kg−1) treatment and exercise improved the atrophic parameters that had deteriorated in the db/db mice, inhibited serum inflammatory markers and significantly attenuated pyroptosis in atrophic GAS. In addition, a combined MCC950 treatment with exercise (DEI) exhibited a further improvement in glucose uptake capacity and muscle performance. This combined treatment also improved the FCSA of GAS muscle indicated by Laminin immunofluorescence compared to the group with the inhibitor treatment alone (DI) (DEI vs. DI: 2597 ± 310.97 vs. 1974.67 ± 326.15 µm2, p < 0.05) or exercise only (DE) (DEI vs. DE: 2597 ± 310.97 vs. 2006.33 ± 263.468 µm2, p < 0.05). Intriguingly, the combination of MCC950 treatment and exercise significantly reduced NLRP3-mediated inflammatory factors such as cleaved-Caspase-1, GSDMD-N and prevented apoptosis and pyroptosis in atrophic GAS. These findings for the first time demonstrate that targeting NLRP3-mediated pyroptosis with MCC950 improves diabetic muscle homeostasis and muscle function. We also report that inhibiting pyroptosis by MCC950 can enhance the beneficial effects of aerobic exercise on diabetic muscle atrophy. Since T2DM and muscle atrophy are age-related diseases, the young mice used in the current study do not seem to fully reflect the characteristics of diabetic muscle atrophy. Considering the fragile nature of db/db mice and for the complete implementation of the exercise intervention, we used relatively young db/db mice and the atrophic state in the mice was thoroughly confirmed. Taken together, the current study comprehensively investigated the therapeutic effect of NLRP3-mediated pyroptosis inhibited by MCC950 on diabetic muscle mass, strength and exercise performance, as well as the synergistic effects of MCC950 and exercise intervention, therefore providing a novel strategy for the treatment of the disease.