OBJECTIVE Type 2 diabetes is associated with increased risks of cognitive dysfunction and brain abnormalities. The extent to which risk factor modification can mitigate these risks is unclear. We investigated the associations between incident dementia, cognitive performance, and brain abnormalities among individuals with type 2 diabetes, according to the number of risk factors on target, compared with control subjects without diabetes. RESEARCH DESIGN AND METHODS Prospective data were from UK Biobank of 87,856 individuals (n = 10,663 diabetes, n = 77,193 control subjects; baseline 2006–2010), with dementia follow-up until February 2018. Individuals with diabetes were categorized according to the number of seven selected risk factors within the guideline-recommended target range (nonsmoking; guideline-recommended levels of glycated hemoglobin, blood pressure, BMI, albuminuria, physical activity, and diet). Outcomes were incident dementia, domain-specific cognitive performance, white matter hyperintensities, and total brain volume. RESULTS After a mean follow-up of 9.0 years, 147 individuals (1.4%) with diabetes and 412 control subjects (0.5%) had incident dementia. Among individuals with diabetes, excess dementia risk decreased stepwise for a higher number of risk factors on target. Compared with control subjects (incidence rate per 1,000 person-years 0.62 [95% CI 0.56; 0.68]), individuals with diabetes who had five to seven risk factors on target had no significant excess dementia risk (absolute rate difference per 1,000 person-years 0.20 [−0.11; 0.52]; hazard ratio 1.32 [0.89; 1.95]). Similarly, differences in processing speed, executive function, and brain volumes were progressively smaller for a higher number of risk factors on target. These results were replicated in the Maastricht Study. CONCLUSIONS Among individuals with diabetes, excess dementia risk, lower cognitive performance, and brain abnormalities decreased stepwise for a higher number of risk factors on target.