Diabetes mellitus and depression exhibit a complex bidirectional relationship that profoundly impacts patient health and quality of life. This review explores the physiological mechanisms, including inflammation, oxidative stress, and neuroendocrine dysregulation, that link these conditions. Psychosocial factors such as social support and lifestyle choices also contribute significantly. Epidemiological insights reveal a higher prevalence of depression among diabetics and an increased risk of diabetes in depressed individuals, influenced by demographic variables. Integrated management strategies combining mental health assessments and personalized treatments are essential. Future research should focus on longitudinal and multi-omics studies to deepen understanding and improve therapeutic outcomes.