This manuscript provides a comprehensive review of the epidemiologic evidence linking type 2 diabetes (T2D) and its precursor conditions, elevated adiposity and hyperinsulinemia, to dementia. The mechanisms relating these conditions to dementia may be vascular and non-vascular. Elevated adiposity in middle age is related to a higher risk of dementia but the data on this association in old age is conflicting. Several studies have shown that hyperinsulinemia, a consequence of higher adiposity and insulin resistance, is also related to a higher risk of dementia, including late onset Alzheimer's disease (LOAD). Studies have consistently shown a relation of T2D with higher dementia risk, but the associations are stronger for vascular dementia compared to LOAD. A large proportion of the world population may be at increased risk of dementia given the trends for increasing prevalence of overweight, obesity, hyperinsulinemia, and T2D. However, these associations may present a unique opportunity for prevention and treatment of dementia. There are several known modalities that are effective in the prevention and T2D and the reduction of hyperinsulinemia including lifestyle interventions, metformin, thiazolideniodones, and acarbose. Several studies in the prevention and treatment of T2D are currently measuring cognitive outcomes and will provide information on whether T2D treatment and prevention can prevent cognitive decline and dementia.