Background: We sought to determine if type 2 diabetes mellitus (T2DM) was associated with accelerated decline in domain-specific measures of cognitive function and fine motor speed. Methods: Women aged 65-80 years who were enrolled in a clinical trial of postmenopausal hormone therapy were grouped as having T2DM (n = 179) or not (n = 1984) and followed for an average of 5 years with annual standardized assessments of domain-specific cognitive function. Mean patterns of cognitive measures over time were contrasted between groups using general linear models and Wald tests, with varying levels of covariate adjustment. The influences of age at onset, use of oral medications, and use of insulin were also examined. Results: T2DM was associated with mean deficits of 0.2-0.4 standard deviations (SD) across follow-up in most cognitive domains. Consistent evidence that rates of decline were accelerated among women with T2DM was evident only for verbal knowledge and verbal memory ( p < 0.05). Decrements in fine motor speed, but no measure of cognitive function, were greater for women with earlier onset T2DM. Use of oral diabetes medications was associated with better relative cognitive function. Conclusions: In these women, T2DM was associated with cognitive deficits in most domains. Relative deficits in verbal knowledge and verbal memory may continue to increase after deficits in other domains have stabilized. Relative deficits in fine motor speed may be greater among women with earlier onsets of T2DM. Use of insulin, which may reflect greater T2DM severity, was associated with relatively greater cognitive deficits.