Background Diabetic peripheral neuropathy (DPN), a common complication of diabetes mellitus, is associated with peripheral nerve damage, leading to balance impairments, postural instability, and reduced mobility. Addressing these challenges requires comprehensive interventions that target multiple deficits simultaneously. Evidence suggests that exercise programs combining balance, proprioception, strength, and reaction time training can improve postural stability, enhance mobility, and alleviate pain in individuals with DPN. Objective The objective of this study was to compare the effects of multisystem exercises and conventional exercises on balance, postural stability, mobility, and walking speed and to reduce pain in patients with diabetic peripheral neuropathy. Methods This double-blinded, two-arm parallel design randomized controlled trial was conducted at DHQ Hospital, Pakpattan, Pakistan. A total of 50 participants who met the inclusion criteria were recruited using the nonprobability convenience sampling technique. They were randomly assigned to either a multisystem physical exercise (MPE) group (n = 26) and a conventional exercise group (n = 24). The MPE program included balance, proprioception, strength, and reaction time training, while the control group received conventional exercises, consisted of strength, balance, stretching, and range of motion exercises. Both groups underwent 30 min intervention sessions, 3 times per week, for 8 weeks. The outcome measures used for assessing the balance, postural stability, mobility, and pain included the Berg balance scale (BBS), functional reach test (FRT), time up and go test (TUG), 10 min walk test (10-MWT), and numeric pain rating scale (NPRS). The data was analyzed using SPSS version 26. Results Significant group and time interactions were observed for all outcome measures including BBS, FRT, TUG, 10-MWT, and NPRS (p < 0.001). The between-group analysis also revealed significant differences between the multisystem physical exercise group and the conventional exercise group at both the 4th week and 8th week for BBS, FRT, TUG, 10-MWT, and NPRS (p < 0.05). Conclusion The study concluded that multisystem exercises resulted in significant improvement in balance, postural stability, mobility, and walking speed, along with reduction in pain, compared to conventional exercises in patients with diabetic peripheral neuropathy.