To explore the effect of T2DM on cerebral perfusion, and the relationship between cerebral perfusion changes and cognitive impairment as well as diabetic variables, by using a whole-brain arterial spin-labeling (ASL) MRI technique. This prospective study was approved by the local institutional review board and was performed between November 2012 and October 2013. All subjects provided informed consent. Forty T2DM patients and 41 age-, sex- and education-matched healthy controls were included. Cerebral blood flow (CBF) map was obtained by pulsed ASL perfusion imaging at 3 T MRI. Voxel-wise comparisons on CBF maps with and without partial volume effects (PVEs) correction were performed between groups. Associations between CBF and cognitive functioning, and between CBF and diabetic variables were investigated by using voxel-wise, whole-brain correlation analyses. In T2DM patients, PVEs uncorrected CBF was decreased in the posterior cingulate cortex (PCC), precuneus and bilateral occipital lobe, and increased in the anterior cingulate cortex (corrected P < .05). These changes were largely unchanged after PVEs correction. Correlation analyses revealed that in patients, hypoperfusion in PCC and precuneus regions were related to higher insulin resistance level and deficits in clock-drawing performance, while the occipital hypoperfusion was associated with worse visual-memory performance, regardless of PVEs correction. The cerebral hypoperfusion pattern in T2DM resembles the pattern observed in the early stage of dementia, and increased insulin resistance might be an important risk factor as well as treatment target for such CBF dysregulation.