The purpose of this study was to explore the association between daytime sleepiness on physical activity and functional outcomes in veterans with type 2 diabetes. Physical activity was based on mean self-reported minutes walked per week; the American Diabetes Association's recommendation of 150 minutes activity per week was used to dichotomize participants as sedentary or active. The Epworth Sleepiness Scale measured sleepiness. Sleepy participants had significantly lower scores on the Functional Outcomes of Sleep Questionnaire. Sleepiness was predictive of being sedentary (p = .01) after controlling for age and body mass index. The conclusion is that daytime sleepiness may impede physical activity among veterans with diabetes, confounding self-management.