American Indian (AI) communities experience a disproportionate rate of Type 2 diabetes (T2D) and cumulative exposure to stress. Although this link is well researched among various populations, it has not been examined among AI communities. Path analysis was used to examine a multiple-mediator model to explain how caregiver stress influences self-reported mental and physical health among 100 AI participants with T2D. Caregiver stress was negatively associated with physical and mental health. Physical health was positively associated with family/community connectedness and mental health was positively associated with both family support and connectedness. The relationship between caregiver stress and mental health was partially mediated by family/community connectedness; caregiver stress had no indirect effects on physical health via either hypothesized mediator. Findings demonstrate the importance of integrating individuals’ connection to family and community and its influence on caregiver stress and mental health in intervention programs targeting diabetes management and care among AI communities.