Several studies have suggested that phosphodiesterase (PDE) inhibitors may be a disease-modifying for Alzheimer’s disease (AD). Cilostazol (CSZ) has been shown to be a new treatment for cognitive impairment with limited efficacy. Our aim was to investigate the effect of caffeine on the efficacy of CSZ against STZ-induced type 2 diabetes (T2D)-related cognitive impairment in high fat/high fructose fed rats. The efficacy of low doses of caffeine, CSZ, and CSZ plus caffeine against abnormal behavioral, biochemical, histological, or genetic changes of animal models of AD was examined. Eight weeks treatment with CSZ plus caffeine was more effective than CSZ or caffeine in improving impaired behavioral tests for cognition and memory. Histological examination exhibited a significant augmentation in the efficacy of CSZ by caffeine in protecting neurons from damage in T2D rats. Importantly, CSZ and caffeine normalized the accumulation of Amyloid beta (Aβ-42) and phosphorylated tau protein (p-tau) positive cells in the brain of T2D rats. CSZ or CSZ plus caffeine reversed low glutamate gene expression, elevated cholinesterase level, and elevated caspase-3 activity in T2D rats. Furthermore, CSZ plus caffeine was significantly more effective than CSZ or caffeine in inhibiting the increase in malondialdehyde (MDA) level, total oxidative stress, pro-inflammatory cytokines and glucogen synthase kinase-3 beta (GSK-3β) in the hippocampus of T2D rats. Also, CSZ plus caffeine was more effective than CSZ or caffeine in alleviating insulin resistance and hypercholesterolemia in T2D rats. Our findings suggest the possibility of effective treatment of AD by enhancing the therapeutic potential of CSZ through combined treatment with lower doses of caffeine. The enhancement of CSZ effect by caffeine is attributed to the increased inhibitory effect of CSZ on insulin resistance, GSK-3β activity, hypercholesterolemia, oxidative stress and pro-inflammatory cytokines.