Type 2 Diabetes Mellitus is being increasingly associated with dysfunction of cognition. Dementia, including vascular dementia and Alzheimer’s disease, is being recognized as comorbidities of this metabolic disorder. The progressive hallmarks of this cognitive dysfunction include mild impairment of cognition and cognitive decline. Dementia and mild impairment of cognition appear in older patients primarily. Studies on risk factors, neuropathology, and brain imaging have provided important suggestions for mechanisms that lie behind the development of dementia. It is a significant challenge to understand the disease processes related to diabetes which affect the brain and lead to dementia development. The connection between Diabetes Mellitus and dysfunction of cognition has been observed in many human and animal studies that have noted mechanisms related to Diabetes Mellitus are possibly responsible for aggravating cognitive dysfunction. This article attempts to narrate the possible association between type 2 diabetes and Dementia, reviewing studies that have noted this association in vascular dementia and Alzheimer’s disease and helping to explain the potential mechanisms behind the disease process. The Google search for ‘Diabetes Mellitus and Dementia’ was carried out. Also, the search was done using ‘Diabetes Mellitus,’ ‘Vascular Dementia,’ ‘Alzheimer’s Disease.’ The literature search was done from Google Scholar, Pubmed, Embase, ScienceDirect, and MEDLINE. Keeping in mind the increasing rate of Diabetes Mellitus, it is important to establish the type 2 diabetes effect on the brain and diseases of neurodegeneration. This narrative review aims to build awareness regarding different types of dementia and their relationship with diabetes.