The relation between diabetes and major types of dementia is controversial. This systematic review examines the incidence of dementia in people with diabetes mellitus. We identified 14 eligible longitudinal population-based studies of variable methodological quality. The incidence of "any dementia" was higher in individuals with diabetes than in those without diabetes in seven of ten studies reporting this aggregate outcome. This high risk included both Alzheimer's disease and vascular dementia (eight of 13 studies and six of nine studies respectively). Detailed data on modulating and mediating effects of glycaemic control, microvascular complications, and comorbidity (eg, hypertension and stroke) were generally absent. The findings of mechanistic studies suggest that vascular disease and alterations in glucose, insulin, and amyloid metabolism underlie the pathophysiology, but which of these mechanisms are clinically relevant is unclear. Further high quality studies need to be initiated, with objective diabetes assessment, together with reliable methods to establish the contribution of vascular disease and other comorbidity to dementia.