Background <p>Type 2 diabetes mellitus (T2DM) is an important risk factor for cognitive impairment. Prior research has shown cognitive deficits and neural alterations across multiple domains in T2DM patients. However, the sequential dynamics of cognitive decline in this population remain poorly understood. This study employs an integrative approach combining Principal Component Analysis (PCA) and the Event-Based Model (EBM) to identify the temporal sequence of cognitive changes and underlying neural mechanisms in T2DM.</p> Methods <p>This study assessed 119 T2DM patients and 87 healthy controls with neuropsychological tests and Magnetic Resonance Imaging for gray matter volume (GMV). PCA was used to reduce dimensionality in CVLT, STROOP, and WCST due to their substantial number of items, enabling integration into the EBM model. EBM estimated the sequence of cognitive and neurostructural changes. Partial correlation analyses were used to examine associations with clinical factors with controlling covariance.</p> Results <p>Cognitive decline in T2DM began with attention and working memory, followed by executive function and episodic memory. GMV loss started in the insular gyrus, spreading to other regions. T2DM patients exhibited significantly more advanced disease progression than healthy controls (EBM stage 0.54 (0.12) vs. 0.49 (0.10), <i>P</i> = 0.001). A negative correlation linked long-delay memory (CVLT-PC4) to random blood glucose (<i>r</i> = -0.581, <i>P</i>_FDR = 0.025).</p> Conclusion <p>Memory decline and insular gyrus atrophy may serve as early biomarkers for T2DM-related cognitive impairment. These findings highlight potential targets for early intervention and suggest strategies for developing personalized treatments to improve life quality in affected individuals.</p>