Background: Weight loss is key to treatment of older adults with obesity and type 2 diabetes, but also a risk for muscle mass loss. This study investigated whether a whey protein drink enriched with leucine and vitamin D could preserve muscle mass and improve glycemic control during combined lifestyle intervention in this population. Methods: 123 older adults with obesity and type 2 diabetes were randomized into a 13-week lifestyle intervention with dietary advice and exercise, receiving either the enriched protein drink (test) or an isocaloric control (control). Muscle mass was assessed with dual-energy X-ray absorptiometry and glycemic control by oral glucose tolerance test. Statistical analyses were performed using a linear mixed model. Results: There was a nonsignificant increase in leg muscle mass (+0.28 kg; 95% CI, −0.01 to 0.56) and a significant increase in appendicular muscle mass (+0.36 kg; 95% CI, 0.005 to 0.71) and total lean mass (+0.92 kg; 95% CI, 0.19 to 1.65) in test vs. control. Insulin sensitivity (Matsuda index) also increased in test vs. control (+0.52; 95% CI, 0.07 to 0.97). Conclusions: Use of an enriched protein drink during combined lifestyle intervention shows beneficial effects on muscle mass and glycemic control in older adults with obesity and type 2 diabetes.