Aim: The aim of the study was to evaluate the association between C-peptide levels, glycaemic variability and hypoglycaemia in patients with insulin-treated type 2 diabetes (T2D). Methods: A total of 98 patients with T2D treated with basal-bolus insulin were enrolled in a cross-sectional study. Glycaemic variability and hypoglycaemia were assessed from continuous glucose monitoring (CGM) data recorded over 6 days: Glycemic variability was assessed by calculating the mean coefficient of variation (CV), while hypoglycemia was defined as sensor glucose levels ≤ 3.9 mmol/L or < 3.0 mmol/L. Fasting C-peptide and fasting glucose were measured on day 1. Results: Low levels of fasting C-peptide correlated with higher CV (r = −0.53, P < 0.0001). In a multivariate regression model with HbA _1c , body mass index, diabetes duration and total daily insulin dose, only C-peptide was significantly associated with CV. Patients with ≥ 1 episode of hypoglycaemia had significantly lower median C-peptide levels than patients without hypoglycaemia (274 (136–620) pmol/L vs. 675 (445–1013) pmol/L, respectively; P = 0.0004). Also, 17 patients clinically diagnosed with T2D had detectable glutamic acid decarboxylase (GAD) antibodies (≥ 5 U/mL). These GAD-positive patients had significantly lower fasting C-peptide, higher CV and greater frequency of hypoglycaemia than GAD-negative patients. Conclusion: In patients with insulin-treated T2D, low levels of C-peptide are associated with greater glycaemic variability and higher risk of hypoglycaemia, suggesting that C-peptide levels should be taken into consideration when optimizing insulin treatment and assessing hypoglycaemia risk.