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Limited research exists regarding the relationship between fasting plasma C-peptide levels and sarcopenia. As a result, our study aimed to examine this association in elderly Chinese diabetic patients. This cross-sectional study included 288 elderly patients with diabetes mellitus from the Fourth People’s Hospital in Guiyang who were enrolled prospectively between March 2020 and February 2023. The independent variable of interest was fasting plasma C-peptide, while the dependent variable was sarcopenia. Data on several covariates, including demographic factors, lifestyle habits, co-morbidities, anthropometric indicators, and laboratory indicators, were also collected. Of the 288 participants, 27.43% (79/288) had sarcopenia. After adjusting for potential confounding variables, we found a U-shaped association between fasting plasma C-peptide levels and sarcopenia, with inflection points identified at approximately 774 pmol/L and 939 mmol/L. Within the range of 50–744 pmol/L, each 100 pmol/L increase in CysC was associated with a 37% decrease in the odds of sarcopenia (odds ratio [OR], 0.63; 95% confidence interval [CI], 0.49 to 0.83; P