OBJECTIVE Type 2 diabetes is associated with accelerated cognitive decline, especially regarding memory for which the hippocampus plays an essential role. The pathophysiological mechanisms still remain to be elucidated. The purpose of this study is to examine whether hippocampal microvascular and microstructural changes are related to type 2 diabetes (based on status or based on fasting blood glucose [FBG] levels) and verbal memory performance. RESEARCH DESIGN AND METHODS Thirty-nine participants with type 2 diabetes (64.5 ± 6.1 years old) and 34 participants without type 2 diabetes (58.3 ± 9.2 years old) underwent detailed cognitive assessments and 3-Tesla MRI using intravoxel incoherent motion (IVIM) MRI. Multivariate regression analyses controlling for age, sex, education level, BMI, systolic blood pressure, hematocrit level, and relative hippocampal volume were performed to examine associations between hippocampal IVIM measures, type 2 diabetes (status and FBG), and memory performance. RESULTS For the microvasculature, blood perfusion volume (f) was larger in participants with type 2 diabetes, f and blood flow (fD*) increased with higher FBG levels, and microvascular pseudodiffusion (D*) and fD*, which are indicative of altered microvasculature, were higher in participants with both relatively high FBG levels and low memory performance. In addition, fD* increased with lower memory performance. For the parenchymal microstructure, the diffusion (D), indicative of injured microstructure, was higher with reduced memory performance. CONCLUSIONS In addition to the parenchymal microstructure, especially the microvascular properties of the hippocampus are altered in participants with both type 2 diabetes and memory problems and possibly hint at an underlying vascular mechanism.