Diabetes and dementia are two diseases that increased dramatically in most societies in direct proportion to increases in average life expectancy. The two conditions are strongly associated and there is much hope that understanding this association will unlock the enigma that is the pathogenesis of dementia. Previous studies suggest that type 2 diabetes is a risk factor for all-cause dementia, vascular dementia and Alzheimer's disease. However these estimates may not necessarily have taken into account the overlap in dementia pathologies or the competing risk of death. Although the link between diabetes and vascular disease is intuitive, it is now becoming clear that type 2 diabetes is also associated with reduced brain volumes and with progression of brain atrophy, apparently independent of its relation with cerebrovascular disease. This raises the possibility that type 2 diabetes may also contribute to neurodegeneration, and particularly tau pathology. Prospective studies that record extensive multimodal in-vivo biomarkers and conduct rigorous postmortem neuropathological examination are certainly required to tease apart these complex pathways. However monitoring cognitive outcomes from current observational studies and randomized clinical trials of new diabetes treatments could be equally valuable in reducing the dementia epidemic.