Scientists followed 1,000 diabetes patients over the age of 60 in Japan for 15 years.
Doctors are not sure what the link is yet between diabetes and dementia, but they know that sugar can have a damaging effect on both the nervous and vascular systems.
Experts say they want to learn if reducing sugar by taking insulin may help symptoms of Alzheimer's disease.
"The idea that insulin might actually improve brain functioning in people with Alzheimer's disease really is a novel approach to treating the dementia of Alzheimer's disease," said Richard Caselli, a neurologist at Mayo Clinic.
The study is in the journal Neurology.