Abstract The pathophysiology of type 2 diabetes mellitus (T2DM) is increasingly linked to the dysregulation of the gut microbiome, a crucial component of the host's metabolic health. Evidence regarding the compositional and functional changes of the gut microbiome in T2DM is compiled in this semi-systematic review. These changes include decreased microbial diversity, an increased Firmicutes/Bacteroidetes ratio, and a decrease in the number of beneficial short-chain fatty acid (SCFA)-producing bacteria. We elucidate the mechanistic pathways linking dysbiosis to T2DM, including raised intestinal permeability and ensuing systemic inflammation via lipopolysaccharide (LPS) translocation, impaired SCFA signalling affecting glucagon-like peptide-1 (GLP-1) secretion and insulin sensitivity, and dysregulated bile acid metabolism. Furthermore, we explore how these microbial disturbances activate immune pathways (e.g., TLR4 signaling) and disrupt hormonal regulation, supporting resistance to insulin and dysfunction of β-cell. The review also evaluates the therapeutic potential of microbiota-targeted interventions such as probiotics, prebiotics, and synbiotics to restore eubiosis and improve glycemic control. Despite encouraging results, there are still many obstacles to overcome before this research can be applied in clinical settings. These obstacles include the individualized nature of the host-microbiome interaction, methodological variability in microbiome studies, and challenges in establishing causality. Overcoming these hurdles through standardized methods, advanced multi-omics integration, and innovative therapeutic delivery systems is crucial for harnessing the gut microbiome as a novel diagnostic and therapeutic target for T2DM management.