Background <p>Health-related quality of life (HRQOL) is intertwined with the broader lived experience of Type 2 diabetes (T2DM). This study aimed to provide deeper insights into the interaction between lived experiences of people with T2DM and their HRQOL and further contextualise previous quantitative findings that demonstrated the efficacy of a community-based lifestyle intervention (Co-LID) in improving HRQOL.</p> Methods <p>A qualitative study involving five focus group discussions was conducted among 40 people with T2DM in Nepal in February-March 2024. An inductive thematic analysis with an experiential orientation was adopted for data analysis in NVIVO V15. Identified themes were mapped to and interpreted using Ferrans et al. model.</p> Results <p>Analyses revealed six major themes—understanding of HRQOL; Type 2 diabetes and its influence on HRQOL; self-care behaviours improve HRQOL; role of family and social support in T2DM management; health system support shapes HRQOL; and experience participating in the intervention. Participants reported difficulties in adhering to healthy dietary behaviour due to socio-cultural influences, which led to feelings of isolation. While many perceived family and social support provided psychological support, few expressed that sharing experiences made them anxious due to fear and myths around T2DM. Healthcare dissatisfaction and fear of out-of-pocket expenditure were perceived to cause emotional distress. The Co-LID study was perceived to foster autonomy in health behaviour change and community connectedness, leading to improved HRQOL.</p> Conclusion <p>HRQOL emerged as a multidimensional concept encompassing physical, psychosocial, and systemic factors. To improve HRQOL, there is a need for early psychosocial interventions; strategies for prevention and treatment of complications; family-centred peer-led intervention that are culture- and gender-appropriate; and health systemic reforms.</p>