A growing body of evidence supports an intriguing clinical/epidemiological connection between Alzheimer disease (AD) and type 2 diabetes (T2D). T2D patients have significantly increased risk of developing AD and vice versa. Recent studies have begun to reveal common pathogenic mechanisms shared by AD and metabolic disorders, notably obesity and T2D. In T2D and obesity, low-grade chronic inflammation is a key mechanism leading to peripheral insulin resistance, which progressively causes tissue deterioration and overall health decline. In the brain, proinflammatory signaling was recently found to mediate impaired neuronal insulin signaling, synapse deterioration, and memory loss. Here, we review evidence indicating that inflammation, insulin resistance, and mitochondrial dysfunction are common features in AD and T2D. We further propose the hypothesis that dementia and its underlying neuronal dysfunction are exacerbated or driven by peripheral inflammation. Identification of central and peripheral inflammation as potential mediators of brain dysfunction in AD may lead to the development of effective treatments for this devastating disease. © 2014 by the American Diabetes Association.