Diabetes mellitus seems to be associated with gradually developing end-organ damage to the central nervous system. This relatively unknown complication of both diabetes type 1 and type 2 can be referred to as 'diabetic encephalopathy'. Measurable manifestations are electrophysiological and structural changes and limitations in the cognitive functioning. The mechanisms responsible for this diabetic encephalopathy are only partially known. Chronic metabolic and vascular changes seem to play an important role. The effects of diabetes on the brain are most distinct in the elderly. This may be the consequence of interactions between the mechanisms that underlie the ageing of the brain, dementia and the origin of diabetic complications. At present there are few leads for the targeted diagnostics and treatment of individual patients.