Diabetes is a major public health burden. Even a modest effect of diabetes on cognitive function has significant public health implications. Several lines of mechanistic evidence implicate a role of insulin and glucose metabolism on risk of developing dementia, including Alzheimer's disease. Population-based studies have shown that those with type 2 diabetes mellitus have an increased risk of cognitive impairment, dementia, and neurodegeneration. There are many mechanisms through which diabetes could increase risk of dementia, including glycemia, insulin resistance, oxidative stress, advanced glycation endproducts, inflammatory cytokines, and microvascular and macrovascular disease. This paper presents a review of the evidence on diabetes and increased risk of dementia and cognitive impairment, a discussion of different possible mechanisms, and remaining gaps in our knowledge.