Background <p>Impaired plantar tactile acuity and balance dysfunction are common in individuals with type 2 diabetes and contribute to increased fall risk. However, it remains unclear whether deterioration in tactile acuity precedes balance impairment over time. The objective of this study was to determine the temporal relationship between changes in plantar tactile acuity and balance outcomes in adults with type 2 diabetes.</p> Methods <p>This 24-month longitudinal cohort study followed 183 adults with type 2 diabetes assessed at baseline and 6-month intervals. Plantar tactile acuity, postural sway, balance performance, and glycemic control were measured over time. Longitudinal analyses examined changes over time and the temporal direction between tactile acuity and balance outcomes.</p> Results <p>Tactile acuity progressively decreased over time (β = 0.0028, <i>p</i> &lt; 0.001). The declining tactile acuity statistically predicted higher postural sway (β = 0.0173, <i>p</i> &lt; 0.001). Cross-lagged analysis revealed a significant unidirectional effect from TPD to COP instability (β = − 0.185, <i>p</i> = 0.003), with higher TPD predicting lower COP stability, while the reverse pathway was non-significant. Three latent sensory trajectory classes were identified (stable, improving, and declining).</p> Conclusion <p>Progressive loss of plantar tactile discrimination precedes balance impairment in individuals with type 2 diabetes, supporting a sensory-driven mechanism of postural instability. These findings underscore the clinical value of early sensory screening to inform proactive fall-prevention strategies and sensory-focused rehabilitation.</p>