The Pro12Ala polymorphism in the PPAR-gamma gene has been associated with reduced incidence of type 2 diabetes. Although diabetes has been implicated as a risk factor for dementia, the association of Pro12Ala with cognitive impairment is unclear. Dementia and cognitive impairment without dementia (CIND) were determined during six annual follow-up evaluations in a cohort of 929 older Latinos. Among those with diabetes at baseline, there was an increased rate of dementia/CIND for Ala carriers compared to non-carriers (adjusted hazard ratio (HR)=2.5, 95% confidence interval (CI): 1.3-4.9) but not among non-diabetic participants (adjusted HR=0.94; 95% CI: 0.49-1.8). Among males, there was also an increased rate for Ala carriers (adjusted HR=2.7, 95% CI: 1.4-5.2) but not among female carriers (adjusted HR=0.88; 95% CI: 0.47-1.6). The rate of dementia/CIND was highest in diabetic male Ala carriers (adjusted HR=4.2; 95% CI: 1.5-11) compared to non-diabetic male carriers (adjusted HR=2.9; 95% CI: 1.1-7.4), diabetic female carriers (HR=1.6; 95% CI: 0.66-4.1), and non-diabetic female carriers (HR=0.52; 95% CI: 0.21-1.3). These data suggest that although the Ala variant is associated with a reduced risk of type 2 diabetes, it may increase the risk of cognitive impairment in individuals once diabetes has developed. Male Ala carriers may also have a greater risk of dementia/CIND.