Mild cognitive impairment (MCI) is a modifiable risk factor in progression of several diseases including dementia and type 2 diabetes. If cognitive impairments are not reversed at an early stage of appearance of symptoms, then the prolonged pathogenesis can lead to dementia and Alzheimer’s disease (AD). Therefore, it is necessary to detect the risk factors and mechanism of prevention of cognitive dysfunction at an early stage of disease. Poor lifestyle, age, hyperglycemia, hypercholesterolemia, and inflammation are some of the major risk factors that contribute to cognitive and memory impairments in diabetic patients. Mild cognitive impairment was seen in those individuals of type 2 diabetes, who are on an unhealthy diet. Physical inactivity, frequent alcohol consumptions, and use of packed food products that provides an excess of cheap calories are found associated with cognitive impairment and depression in diabetic patients. Omega fatty acids (FAs) and polyphenol-rich foods, especially flavonoids, can reduce the bad effects of an unhealthy lifestyle; therefore, the consumption of omega FAs and flavonoids may be beneficial in maintaining normal cognitive function. These functional foods may improve cognitive functions by targeting many enzymes and molecules in cells chiefly through their anti-inflammatory, antioxidant, or signaling actions. Here, we provide the current concepts on the risk factors of cognitive impairments in type 2 diabetes and the mechanism of prevention, using omega FAs and bioactive compounds obtained from fruits and vegetables. The knowledge derived from such studies may assist physicians in managing the health care of patients with cognitive difficulties.