Diabetes is an increasingly common disorder which causes and contributes to a variety of central nervous system (CNS) complications which are often associated with cognitive deficits. There appear to be two types of diabetic encephalopathy. Primary diabetic encephalopathy is caused by hyperglycemia and impaired insulin action, which evolves in a diabetes duration-related fashion and is associated with apoptotic neuronal loss and cognitive decline. This appears to be particularly associated with insulin-deficient diabetes. Secondary diabetic encephalopathy appears to arise from hypoxic-ischemic insults due to underlying microvascular disease or as a consequence of hypoglycemia. This type of cerebral diabetic complication is more common in the type 2 diabetic population. Here, we will review the clinical and experimental data supporting this conceptual division of diabetic CNS complications and discuss the underlying metabolic, molecular, and functional aberrations.