Insulin, a key pleiotropic hormone, regulates metabolism through several signaling pathways in target tissues including skeletal muscle, liver, and brain. In the brain, insulin modulates learning and memory, and impaired insulin signaling is associated with metabolic dysregulation and neurodegenerative diseases. At the receptor level, in aging and Alzheimer's disease (AD) models, the amount of insulin receptors and their functions are decreased. Clinical and animal model studies suggest that memory improvements are due to changes in insulin levels. Furthermore, diabetes mellitus (DM) and insulin resistance are associated with age-related cognitive decline, increased levels of β-amyloid peptide, phosphorylation of tau protein; oxidative stress, pro-inflammatory cytokine production, and dyslipidemia. Recent evidence shows that deleting brain insulin receptors leads to mild obesity and insulin resistance without influencing brain size and apoptosis development. Conversely, deleting insulin-like growth factor 1 receptor (IGF-1R) affects brain size and development, and contributes to behavior changes. Insulin is synthesized locally in the brain and is released from the neurons. Here, we reviewed proposed pathophysiological hypotheses to explain increased risk of dementia in the presence of DM. Regardless of the exact sequence of events leading to neurodegeneration, there is strong evidence that mitochondrial dysfunction plays a key role in AD and DM. A triple transgenic mouse model of AD showed mitochondrial dysfunction, oxidative stress, and loss of synaptic integrity. These alterations are comparable to those induced in wild-type mice treated with sucrose, which is consistent with the proposal that mitochondrial alterations are associated with DM and contribute to AD development. Alterations in insulin/IGF-1 signaling in DM could lead to mitochondrial dysfunction and low antioxidant capacity of the cell. Thus, insulin/IGF-1 signaling is important for increased neural processing and systemic metabolism, and could be a specific target for therapeutic strategies to decrease alterations associated with age-related cognitive decline.