In type 2 diabetes mellitus (T2DM) and its related disorders like obesity, the abnormal protein processing, oxidative stress and proinflammatory cytokines will drive the activation of inflammatory pathways, leading to low-grade chronic inflammation and insulin resistance (IR) in the periphery and impaired neuronal insulin signaling in the brain. Studies have shown that such inflammation and impaired insulin signaling contribute to the development of Alzheimer’s disease (AD). Therefore, new therapeutic strategies are needed for the treatment of T2DM and T2DM-linked AD. Melatonin is primarily known for its circadian role which conveys message of darkness and induces night-state physiological functions. Besides rhythm-related effects, melatonin has anti-inflammatory and antioxidant properties. Melatonin levels are downregulated in metabolic disorders with IR, and activation of melatonin signaling delays disease progression. The aim of this Review is to highlight the therapeutic potentials of melatonin in preventing the acceleration of AD in T2DM individuals through its therapeutic mechanisms, including antioxidative effects, anti-inflammatory effects, restoring mitochondrial function and insulin sensitivity.