COVID-19 disrupted health care provision and access and reduced household income. Households with chronically ill patients are more vulnerable to these effects as they access routine health care. Yet, a few studies have analysed the effect of COVID-19 on household income, health care access costs, and financial catastrophe due to health care among patients with type 2 diabetes (T2D), especially in developing countries. This study fills that knowledge gap. We used data from a cross-sectional survey of 500 people with T2D, who were adults diagnosed with T2D before COVID-19 in Tanzania (March 2020). Data were collected in February 2022, reflecting the experience before and during COVID-19. During COVID-19, household income decreased on average by 16.6%, while health care costs decreased by 0.8% and transport costs increased by 10.6%. The overall financing burden for health care and transport relative to household income increased by 32.1% and 45%, respectively. The incidences of catastrophic spending above 10% of household income increased by 10% (due to health care costs) and by 55% (due to transport costs). The incidences of catastrophic spending due to health care costs were higher than transport costs, but the relative increase was higher for transport than health care costs (10% vs. 55% change from pre-COVID-19). The likelihood of incurring catastrophic health spending was lower among better educated patients, with health insurance, and from better-off households. COVID-19 was associated with reduced household income, increased transport costs, increased financing burden and financial catastrophe among patients with T2D in Tanzania. Policymakers need to ensure financial risk protection by expanding health insurance coverage and removing user fees, particularly for people with chronic illnesses. Efforts are also needed to reduce transport costs by investing more in primary health facilities to offer quality services closer to the population and engaging multiple sectors, including infrastructure and transportation.