Research on peer support programmes for people with type 2 diabetes has shown a positive effect on health-related behaviours, yet little is known about what causes this effect. This study researched the mechanisms generating immediate outcomes (changes in awareness) and intermediate outcomes (behavioural changes) among socially vulnerable people with type 2 diabetes in a Danish peer support intervention. Using a realist-informed evaluation approach, we investigated how nonprofessional volunteers perceived and performed as peer supporters, and how these activated mechanisms in the interaction between peers and peer supporters. Furthermore, we explored how contextual factors related to peers and peer supporters influenced how mechanisms worked. The study was based on a qualitative multimethod case-study design (n = 11). Data consisted of semistructured interviews with four key informants (peer, peer supporter, project manager, and a diabetes nurse) (n = 27), participation observation of two peer supporter training courses, one network meeting, two supervisions for peer supporters, and logbooks from peer supporters. Data were analysed using systematic text condensation. The findings revealed that the peer supporters used their lived experience to perceive and perform in the peer support meetings. Furthermore, being with a like-minded person with type 2 diabetes activated mechanisms, such as trust, respect, empathy, care, and honesty between peers and peer supporters, which led to increased self-care awareness among the peers (immediate outcome). Finally, the findings revealed that contextual factors, such as peer supporters’ lived experiences and peers’ and peer supporters’ sociodemographic characteristics and health conditions, affected how the mechanisms were at stake. Thus, our study contributes on how to support socially vulnerable people with type 2 diabetes and where peer support programmes can supplement the established healthcare system by providing social and emotional support to this vulnerable group. This trial is registered with ClinicalTrials.gov, Retrospective Registration (20 Jan 2021), registration number NCT04722289.