We investigated the effect of kangen-karyu (KK), a Chinese herbal prescription, on cognitive deficits and central cholinergic systems of type 2 diabetic db/db mice. Seven-week-old db/db (Y-db/db) mice received daily administration of test drugs during an experimental period of 12 weeks. At 18 weeks of age (O-db/db), the animals underwent the water maze test. Compared with age-matched control strain mice (O-m/m), vehicle-treated O-db/db mice showed impaired learning and memory performance. KK (100 - 200 mg/kg per day) and the reference drug tacrine (THA: 2.5 mg/kg per day) ameliorated the performance of O-db/db mice without affecting their serum glucose level. O-db/db mice had lower levels of brain-derived neurotrophic factor (BDNF) mRNA and its protein in the brain than O-m/m mice. Expression levels of central cholinergic marker proteins in the hippocampus and the number of cholinergic cells in the medial septum and basal forebrain were also significantly lower in O-db/db than in O-m/m mice, whereas no significant differences in the expression levels of these factors and the cell number were found between Y-m/m and Y-db/db mice. KK and THA treatment significantly reversed the down-regulated levels of cholinergic markers, choline acetyltransferase-positive cell number, and BDNF expression in db/db mice. These findings suggest that KK as well as THA prevents diabetes-induced cognitive deficits by attenuating dysfunction of central cholinergic systems.