One of the most predominant enduring consequences of Diabetes Mellitus (DM) is Diabetic Encephalopathy (DE), which has neither a reliable treatment nor an effective preventive strategy. Cognitive dysfunction is the primary problem allied with DE. The current inquiry aims to determine the potency of menthol in reducing the risk of brain complications induced by Streptozotocin (STZ) in diabetic rats. A single STZ intraperitoneal injection (40 mg/kg body weight) was employed to induce DM in Sprague-Dawley male rats and animals were held without treatment for 30 days to develop DE. The Morris water maze test, followed by the supplementation of menthol and metformin for 60 days at 50 and 100 mg/kg body weight dosages, verified the cognitive deficit in diabetic rats. After 60 days of therapy, rats were sacrificed to obtain blood and brain tissues for biochemical investigation. Oral delivery of menthol enhanced cognitive function in DE rats. Furthermore, menthol markedly reduced fasting blood sugar, glycosylated Hemoglobin (HbA1c), and elevated plasma insulin levels. In the brain, menthol increases neurotransmitter levels and choline acetyltransferase activity while decreasing AChE activity. Menthol also downregulated the expressions of monoamine oxidase A and B. Thus, the study indicates that menthol was effective in attenuating the neurodegenerative alterations in DE rats. It had a therapeutic potential and could be effectively utilized as a dietary supplement for regulating complications associated with encephalopathy.