The aim of this study was to identify characteristics of neuropsychological functioning among type 2 diabetic adults with and without major depression. Twenty type 2 diabetics with major depression, 20 non-depressed type 2 diabetics and 34 controls without diabetes or depression were compared. A mixed effects repeated measures analysis of covariance indicated significant differences in overall cognitive functioning between diagnostic groups, specifically depressed diabetics demonstrated greater cognitive dysfunction than controls. Further comparisons indicated that depressed diabetics performed significantly worse than non-depressed diabetics in attention/information processing speed. Relative to controls, depressed diabetics performed significantly worse in attention/information processing speed and executive functioning, while there was a trend for non-depressed diabetics to perform worse in executive functioning. These findings suggest that depression negatively impacts cognitive performance among adults with type 2 diabetes, which may have implications for neural circuitry underlying cognitive and mood changes in diabetic patients.