In this review, we discuss the concept of Malnutrition Modulated Diabetes Mellitus, currently labelled as Type 5 diabetes mellitus, a distinct form of diabetes seen in lean, undernourished individuals, particularly in low- and lower middle-income countries. This review highlights the role of early-life and chronic undernutrition in impairing pancreatic β-cell development and diminished insulin secretion with preserved insulin sensitivity. Furthermore, we present epidemiological, experimental, and clinical evidence of undernutrition and its effects on glucose tolerance and discuss the differential diagnoses of this disorder and its differentiating features from other forms of diabetes, and emphasize the need for specific diagnostic criteria and tailored management strategies for this neglected form of diabetes.