Type II diabetes mellitus (T2DM) is a prevalent, long-standing metabolic condition marked by the body's reduced response to insulin and inadequate insulin production, impacting a significant portion of the global population. Research has demonstrated that bioactive peptides play a crucial role in reducing blood sugar levels, enhancing insulin sensitivity, balancing lipid metabolism, and combating inflammation. These peptides also contribute to the enhancement of pancreatic islet function, lowering systemic inflammation by influencing various molecular signaling pathways. This paper provides an overview of recent advancements and potential applications of bioactive peptides in addressing T2DM. It highlights the diverse impacts of bioactive peptides sourced from different origins in combating diabetes. This comprehensive review offers theoretical substantiation and novel insights to support the future clinical utilization and exploration of bioactive peptides for T2DM management.