High dementia prevalence and associated disability have necessitated a focus on the identification of potentially modifiable risk factors. One such example is type 2 diabetes; however, there are not enough large population-based studies that can provide an accurate estimate of the strength of the association. Therefore, we investigated prospective associations between diabetes and dementia using Australian national registries. The study included ~850,000 people with type 2 diabetes (median age=66.2 years, females=45.5%) registered on the National Diabetes Services Scheme (NDSS) during the period 2002-2014 and followed up for at least 1 year (median 7.0 years). Propensity score matching (based on logistic regression with birth year, sex, socio-economic index and medication history as predictors) was then conducted to match (1:1) people with diabetes to a general population control group without diabetes. The latter comprised people with no registration history on NDSS or record of taking glucose lowering drugs on the Pharmaceutical Benefits Scheme (median age=67.3 years, females=43.9%, median follow up=7.5 years). Dementia was defined either by dementia drug use (cholinesterase inhibitors or memantine) or dementia-related death. The association between diabetes and dementia was examined using Cox’s proportional hazard model that treated each individual with diabetes and their matched control as one stratum. Diabetes was associated with an increased risk of dementia-related death (HR 1.19, 95% CI 1.17, 1.22), while no significant association was observed between diabetes and dementia medication use (HR 0.99, 95% CI 0.97, 1.02). When both dementia-related death and dementia drug use were included in the outcome, diabetes was still associated with an increased risk of dementia (HR 1.11, 95% CI 1.09, 1.14). These findings highlight the need for clinicians to be vigilant in identifying and managing diabetes as a potentially modifiable risk factor for cognitive decline and dementia. Disclosure K.Mehta: None. A.Salim: None. J.W.Sacre: None. K.J.Anstey: Speaker's Bureau; Nutricia. D.J.Magliano: None. J.E.Shaw: Advisory Panel; Abbott Diagnostics, Lilly, Zuellig Pharma Holdings Pte. Ltd., Mylan, Research Support; AstraZeneca, Speaker's Bureau; AstraZeneca, Roche Diagnostics, Lilly, Amgen Inc., Sanofi, Zuellig Pharma Holdings Pte. Ltd. Funding Deakin University (to K.M.); Alicia Baker and Eleanor Shaw Gender Equity Fellowship (to D.J.M.); National Health and Medical Research Council (APP1173952 to J.E.S.); Victorian Government’s Operational Infrastructure Support Program