Background/Objectives: Type 2 diabetes mellitus (T2-DM) is a continuing national and global health challenge. Retinoic acid (RA), the major transcription-regulating ligand, plays a critical role in energy metabolism, and pancreatic β-cell homeostasis. However, human data linking circulating RA levels to T2-DM and its clinical outcomes are sparse and inconsistent. In this ethically approved cross-sectional study of consented hospital-diagnosed adult T2-DM patients (n = 292) and matched healthy controls (n = 64), variation in plasma RA levels and its relationship with disease and patient characteristics were investigated. Methods: RA concentrations assayed via specific ELISA were related to glycemic control indices [fasting blood glucose (FBG) and HbA1c], the triglyceride–glucose ratio for insulin resistance (TyG-IR), treatment modalities, and complications derived from patients’ medical records. Results: RA concentrations were substantially lower in patients with T2-DM (mean ± SD 2.63 ± 1.54 ng/mL) than in controls (5.21 ± 4.3 ng/mL; p < 0.001). Within the diabetic cohort, RA was inversely correlated with indices of glycemic dysregulation and insulin resistance. Plasma RA exhibited strong discriminatory performance for distinguishing diabetic patients from healthy adults. Its AUC is 0.870 (p < 0.0001 and 95% CI = 0.832–0.902) with a sensitivity of 79.7% and a specificity of 81.3%, at an optimal cutoff of ≤3.061 ng/mL. Conclusions: Circulating RA is associated with metabolic perturbations that define T2-DM, and therefore is promising as a clinically useful biomarker. It may reflect pathophysiological processes linking nutrient signaling, energy handling and β-cell function in T2-DM that merit further evaluation.