Objective To investigate the effect of fear of falling (FOF) on life-space mobility (LSM) and its threshold effect in older adults with diabetes mellitus (DM). Methods A total of 435 elderly DM patients were investigated using a general information questionnaire, the Modified Falls Efficacy Scale (MFES) (to measure FOF), and the Life-Space Assessment (LSA) scale. Univariate analysis, hierarchical logistic regression analysis, and smoothed fitted curve were used to analyze threshold effects and explore the influencing factors and degree of influence. Results The LSA score was 59.13±14.14, and 45.7% of the participants had LSM restriction. The FOF score was 7.55±1.44. Hierarchical logistic regression analysis showed that FOF, perception of the outdoor environment and diabetic complications were the main factors influencing LSM restriction (all P<0.05). The fitted curve and threshold effect analysis showed that the level of LSM was not affected by FOF score ≤6.50 (P>0.05), and it was increased with increasing FOF score >6.50 (P<0.05). Conclusion Older DM adults have a high proportion of impaired LSM and a medium level of FOF. FOF score >6.50 can be used as a cut-off value for predicting confidence in activities among older DM patients, and the influence of the environment and diabetes complications should be taken into account when developing safe activity interventions.