ObjectivesTo investigate the intermediary role of physical performance in the association between physical activity and mild cognitive impairment (MCI) in older adults with type 2 diabetes mellitus (T2DM), residing in rural areas.MethodsThis study employed a random sampling method to select 316 patients aged 65 years and older, all diagnosed with T2DM, from 24 different rural areas in China. The relationships between physical activity, physical performance, and MCI were analyzed using a logistic regression model, and the proposed mediation model was validated through bootstrap test.ResultsIn this study, the prevalence of MCI in the rural‐based older adults with T2DM was 53.48%. A significant correlation was observed between the levels of physical activity and physical performance. Moreover, diminished physical performance was positively correlated with an increased propensity for MCI, even after adjusting for relevant covariates. Physical performance was discerned to exert a partial mediating influence on the relationship between physical activity and MCI.ConclusionsThe empirical evidence generated by this study posits that the impact of physical activity on MCI is partially mediated through physical performance in an aging population with T2DM residing in rural environments. Consequently, interventional strategies aimed at ameliorating physical performance may serve as a viable approach to mitigate the progression of cognitive decline.