Background: Rational prescribing and adherence to evidence-based clinical guidelines are fundamental to optimizing therapeutic outcomes and ensuring medication safety in patients with diabetes mellitus. Given the increasing complexity of antidiabetic pharmacotherapy and the growing prevalence of polypharmacy, periodic evaluation of prescribing practices remains essential for identifying deviations from recommended standards and minimizing medication-related risks. Objective: To assess rational prescribing practices, evaluate adherence to American Diabetes Association (ADA) treatment guidelines, and determine the prevalence of medication safety concerns among patients receiving antidiabetic therapy in a tertiary care hospital. Methods: A prospective observational prescription audit was conducted involving 400 antidiabetic prescriptions. Prescriptions were evaluated using World Health Organization (WHO) core prescribing indicators, ADA guideline recommendations, and established medication safety assessment criteria. Prescribing rationality was assessed based on drug selection, dosage regimen, frequency, route of administration, and conformity with standard treatment guidelines. Drug–drug interactions, prescribing errors, and dose modification patterns were systematically analysed. Results: A total of 892 medications were prescribed, with an average of 2.23 drugs per prescription. Generic prescribing constituted 38.5% of medications, while 82.3% were prescribed from the Essential Medicines List. Injectable medications and antibiotics were identified in 15.25% and 6.0% of prescriptions, respectively. ADA guideline adherence was observed in 80.5% of prescriptions. Overall, 84.0% of prescriptions were categorized as rational, whereas 16.0% demonstrated prescribing inadequacies. Drug–drug interaction assessment revealed no clinically significant interactions in 57.0% of prescriptions; however, minor, moderate, and major interactions were identified in 24.0%, 14.5%, and 4.5% of cases, respectively. Prescribing error analysis showed that 82.5% of prescriptions were free from errors, while omission of dosage information represented the most frequent deficiency (6.0%). Dose adjustment evaluation indicated that 61.0% of prescriptions required no modification, whereas dose escalation and dose reduction were observed in 25.5% and 13.5% of cases, respectively. Conclusion: The study demonstrates substantial adherence to ADA recommendations and a high prevalence of rational prescribing practices in diabetes management. Nevertheless, the occurrence of prescribing errors, clinically relevant drug interactions, and suboptimal generic prescribing underscores the need for continuous prescription auditing, guideline-directed pharmacotherapy, and enhanced clinical pharmacy interventions to further improve medication safety and therapeutic quality.