Background: Dynapenia and non-alcoholic fatty liver disease (NAFLD) are common, especially in the middle and advanced-age diabetic male population. We aimed to examine the clinical features, NAFLD severity, and parameters associated with the presence of dynapenia in type 2 diabetes mellitus (T2DM) cases. Material and Methods: One hundred thirty-five male patients diagnosed with T2DM between 45 and 65 years of age were included. Patients were staged by ultrasonography according to NAFLD status. Results: There were significant differences in muscle strength, upper arm circumference, calf circumference, and up-and-go test scores between the mild-moderate-severe and non-NAFLD groups (p < 0.001 for all). The frequency of dynapenia was lower, and arm and calf circumferences were higher in patients without NAFLD. The muscle strength, upper arm circumference, calf circumference, and up-and-go test scores were significantly lower in the dynapenic group compared to the non-dynapenic group (p < 0.005 for all). The prevalence of dynapenia increased along with the increase in NAFLD stages (p < 0.001). Conclusions: We detected a significant association between NAFLD and dynapenia in middle-aged men with T2DM. As muscle strength decreases, the amount of fat in the liver increases, and as the fat in the liver increases, muscle strength decreases.