Background: Type 2 diabetes mellitus (T2DM) increases the risk of vascular cognitive impairment (VCI). It is unknown which type of vascular lesions and co-morbid etiologies, in particular Alzheimer's disease pathology, are associated with T2DM in patients with VCI, and how this relates to cognition and prognosis. Objective: To compare brain MRI and cerebrospinal fluid (CSF) markers, cognition, and prognosis in patients with possible VCI with and without T2DM. Methods: We included 851 memory clinic patients with vascular brain injury on MRI (i.e., possible VCI) from a prospective cohort study (T2DM: n = 147, 68.4±7.9 years, 63% men; no T2DM: n = 704, 67.6±8.5 years, 52% men). At baseline, we assessed between-group differences in brain MRI abnormalities, CSF markers of Alzheimer's disease, and cognitive profile. After two years follow-up, we compared occurrence of cognitive decline, stroke, and death. Results: The distribution of clinical diagnoses did not differ between patients with and without T2DM. T2DM patients had more pronounced brain atrophy (total and white matter volume), and more lacunar infarcts, whereas microbleeds were less common (all p < 0.05). CSF amyloid-β levels were similar between the groups. T2DM patients performed worse on working memory (effect size: - 0.17, p = 0.03) than those without, whereas performance on other domains was similar. During follow-up, risk of further cognitive decline was not increased in T2DM. Conclusion: In patients with possible VCI, presence of T2DM is related to more pronounced brain atrophy and a higher burden of lacunar infarcts, but T2DM does not have a major impact on cognitive profile or prognosis.