Aims Insomnia is notably prevalent among individuals with type 2 diabetes and adversely affects both glycemic control and overall quality-of-life. The objective of this study was to evaluate the possible risk factors for insomnia in patients diagnosed with type 2 diabetes and co-morbid insomnia. Methods This is a baseline study analyzing cross-sectional data at baseline timepoint collected in a randomized controlled trial study. A total of 227 participants with type 2 diabetes and insomnia were recruited. The diagnosis of insomnia was based on Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition and the total score of Insomnia Severity Index. Multiple linear regression model was used to analyze the possible biomedical and mental health risk factors for insomnia severity, total sleep time, sleep efficiency and sleep onset latency. Results Factors significantly associated with insomnia severity included fasting blood glucose and depression. Blood magnesium level was related to total sleep time. Sleep efficiency was associated with blood phosphorus. Factors related to sleep onset latency were depression and fatigue. Conclusion Factors related to high insomnia severity and poor sleep quality in type 2 diabetes patients with insomnia included fasting blood glucose, blood magnesium, blood phosphorus, depression and fatigue.