Epidemiological studies have shown that individuals with type 2 diabetes have an increased risk of developing neurodegenerative diseases. These diseases and type 2 diabetes share several risk factors. Meanwhile, the antidiabetic drug metformin offers promising neuroprotective effects by reducing oxidative stress and neuroinflammation, two significant factors in neurodegenerative diseases. This review examines the mechanisms by which metformin mitigates neuronal damage. Metformin reduces neuroinflammation by inhibiting microglial activation and suppressing proinflammatory cytokines. It also triggers the nuclear factor erythroid-2-related factor-2 (Nrf2) pathway to combat oxidative stress, an essential regulator of antioxidant defenses. These outcomes support the possible neuroprotective roles of metformin in type 2 diabetes-related cognitive decline and conditions like Alzheimer's disease. Metformin's therapeutic potential is further supported by its capacity to strengthen the blood-brain barrier's (BBB's) integrity and increase autophagic flux. Metformin also offers several neuroprotective effects by targeting multiple pathological pathways. Moreover, metformin is being studied for its potential benefits beyond glycemic control, particularly in the areas of cognition, Alzheimer's disease, aging, and stroke management. Evidence from both clinical and preclinical studies indicates a complex and multifaceted impact, with benefits varying among populations and depending on underlying disease conditions, making it an appealing candidate for managing several neurodegenerative diseases.