Background Metformin is frequently prescribed as a first-line oral hypoglycemic drug to treat insulin resistance-causing type 2 diabetes mellitus (T2DM). Long-term metformin use results in vitamin B12 deficiency, which is frequently overlooked and undiagnosed. A severe deficit may cause severe anemia and gastrointestinal, or neurological issues. Studies are scarce on this issue in Pakistani patients with T2DM. The current study aimed to estimate the prevalence of metformin-induced vitamin B12 deficiency in T2DM patients and to explore how it relates to metformin dosage or duration of therapy. Methodology A descriptive cross-sectional study was conducted on 260 T2DM patients using metformin therapy for more than a year and attending the outpatient diabetes clinic and the medicine department of Sheikh Zayed Hospital, Rahim Yar Khan, Pakistan, from August 2022 to October 2023. All socio-demographic, clinical, and general characteristics were collected. Blood samples were taken to measure the serum vitamin B12 levels, and based on these levels, deficient and normal group characteristics were compared. Statistical analysis was performed using IBM SPSS Statistics for Windows, Version 23 (Released 2015; IBM Corp., Armonk, New York, United States). Results Based on the serum levels of vitamin B12 of the studied T2DM on the metformin regimen, the overall prevalence of vitamin B12 deficiency was found to be 36.54% (95). The B12 deficiency was higher among the age group of 41-50 years (109, 41.9%), female gender (150, 57.7%, p-value=0.0035), urban residents (194, 74.6%), non-smokers (197, 75.8%), and with a history of chronic disease (131, 50.4%). There was a statistically significant difference in vitamin B12 levels based on T2DM duration (p=0.012), with a higher prevalence in patients with a longer diabetes history of more than two years. There was no discernible statistical relationship between patients receiving different dosages of metformin (odds ratio (OR)=0.8627; 95% confidence interval (CI) (0.5195, 1.4326); p-value=0.568), durations of metformin (OR=0.7400; 95% CI (0.442, 1.2325); p-value=0.247), or intake of vitamin B12 (OR=0.8532; 95% CI (0.5073, 1.4351); p-value=0.549). Conclusion The prevalence of vitamin B12 deficiency impacted more than one-third of T2DM patients using metformin (36.54%). The risk of vitamin B12 deficiency may increase in females with higher metformin dosages and longer durations of treatment. Furthermore, a statistically significant correlation exists between vitamin B12 deficiency and the longer duration of T2DM. These findings highlight the relevance of routinely monitoring serum levels of vitamin B12 among those with T2DM, especially when metformin is being given for over a year or at doses greater than 1000 mg per day. These preventive strategies will aid in the early detection of vitamin B12 deficiency, allowing patients to be treated with supplementation before problems such as anemia or neuropathies arise, resulting in improved quality of life and a lower socioeconomic burden.