The goal of this research is to study the prevalence of cognitive impairment in diabetes mellitus (DM) patients and establish the necessity of detecting and treating it early in these patients. A cross-sectional study was conducted at a tertiary care hospital in Mysuru for 4 months examined diabetic patients (test) and nondiabetic subjects (control) for cognitive decline using the Montreal Cognitive Assessment (MoCA) tool. Cognitive functions such as visuospatial/executive function, naming, attention, language, abstraction, delayed recall, and orientation were assessed in both groups. The diabetic group showed a significantly lower total MoCA score than the non-diabetic group (18.99 ± 0.48 and 26.21 ± 0.46, respectively; p < 0.001). Assessment of scores in diabetic patients demonstrated the significant influence of age demographics on cognitive impairment (p-value < 0.001). Furthermore, a higher proportion of diabetic patients displayed cognitive impairment despite a higher score in a single subdomain, making it evident that diabetes is diverse and multifactorial in origin, where oxidative stress and inflammatory responses play a predominant role. This study suggested that the local T2DM population residing in Mysuru (India) has a high prevalence of cognitive impairment, evident from poor performance in almost all cognitive domains assessed by MoCA. Future studies could examine the generalizability of cognitive function findings in diabetic patients across diverse geographic regions and ethnic groups, as well as investigate interventions such as lifestyle modifications and medication to prevent or delay cognitive decline in those with diabetes.