Purpose Patients with type 2 diabetes (T2D) have demonstrated a higher risk for developing more severe cases of COVID-19, but the complex genetic mechanism between them is still unknown. The aim of the present study was to untangle this relationship using genetically based approaches. Methods By leveraging large-scale genome-wide association study (GWAS) summary statistics of T2D and COVID-19 severity, linkage disequilibrium score regression and Mendelian randomization (MR) analyses were utilized to quantify the genetic correlations and causal relationships between the two traits. Gene-based association and enrichment analysis were further applied to identify putative functional pathways shared between T2D and COVID-19 severity. Results Significant, moderate genetic correlations were detected between T2D and COVID-19 hospitalization ( r g  = 0.156, SE = 0.057, p  = 0.005) or severe disease ( r g  = 0.155, SE = 0.057, p  = 0.006). MR analysis did not support evidence for a causal effect of T2D on COVID-19 hospitalization (OR 1.030, 95% CI 0.979, 1.084, p  = 0.259) or severe disease (OR 0.999, 95% CI 0.934, 1.069, p  = 0.982). Genes having p gene  < 0.05 for both T2D and COVID-19 severe were significantly enriched for biological pathways, such as response to type I interferon, glutathione derivative metabolic process and glutathione derivative biosynthetic process. Conclusions Our findings further confirm the comorbidity of T2D and COVID-19 severity, but a non-causal impact of T2D on severe COVID-19. Shared genetically modulated molecular mechanisms underlying the co-occurrence of the two disorders are crucial for identifying therapeutic targets.