Globally, the incidence of type 2 diabetes mellitus (T2DM) and Alzheimer’s disease (AD) epidemics is increasing rapidly and has huge financial and emotional costs. The purpose of the current review article is to discuss the shared pathophysiological connections between AD and T2DM. Research findings are presented to underline the vital role that insulin plays in the brain’s neurotransmitters, homeostasis of energy, as well as memory capacity. The findings of this review indicate the existence of a mechanistic interplay between AD pathogenesis with T2DM and, especially, disrupted insulin signaling. AD and T2DM are interlinked with insulin resistance, neuroinflammation, oxidative stress, advanced glycosylation end products (AGEs), mitochondrial dysfunction and metabolic syndrome. Beta-amyloid, tau protein and amylin can accumulate in T2DM and AD brains. Given that the T2DM patients are not routinely evaluated in terms of their cognitive status, they are rarely treated for cognitive impairment. Similarly, AD patients are not routinely evaluated for high levels of insulin or for T2DM. Studies suggesting AD as a metabolic disease caused by insulin resistance in the brain also offer strong support for the hypothesis that AD is a type 3 diabetes.