(1) Background: Percutaneous endoscopic gastrostomy (PEG) is a widely used long-term enteral nutrition method, but little is known about the associated prognostic factors in patients with PEG. Sarcopenia, a condition characterized by a loss of skeletal muscle mass, increases the risk of developing various gastrointestinal disorders. Yet, the relationship between sarcopenia and the prognosis after PEG remains unclear. (2) Methods: We conducted a retrospective study of patients who underwent PEG consecutively from March 2008 to April 2020. We analyzed preoperative sarcopenia and the prognosis of patients after PEG. We defined sarcopenia as a skeletal muscle index at the level of the third lumbar vertebra of ≤29.6 cm2/m2for women and ≤36.2 cm2/m2for men. Cross-sectional computed tomography images of skeletal muscle at the level of the third lumbar vertebra were evaluated using DICOM image analysis software (OsiriX). The primary outcome was the difference in overall survival after PEG based on the status of sarcopenia. We also performed a covariate balancing propensity score matching analysis. (3) Results: Of 127 patients (99 men, 28 women), 71 (56%) were diagnosed with sarcopenia, and 64 patients died during the observation period. The median follow-up period did not differ between patients with and without sarcopenia (p= 0.5). The median survival time after PEG was 273 days in patients with sarcopenia and 1133 days in those without (p< 0.001). Cox proportional hazard model analyses identified three factors that were significantly associated with overall survival: sarcopenia (adjusted hazard ratio [HR]: 2.9, 95% confidence interval [CI]: 1.6–5.4,p< 0.001), serum albumin level (adjusted HR: 0.34, 95% CI: 0.21–0.55,p< 0.001) and male sex (adjusted HR: 2.0, 95% CI: 1.1–3.7,p= 0.03). Propensity score-matched analysis (n= 37 vs. 37) showed that the survival rate was lower in the sarcopenia group than in the non-sarcopenia group (at 90 days: 77% (95% CI, 59–88) vs. 92% (76–97), at 180 days: 56% (38–71) vs. 92% (76–97), and at one year: 35% (19–51) vs. 81% (63–91),p= 0.0014). (4) Conclusions: Sarcopenia was associated with poor prognosis in patients having undergone PEG.