The glymphatic system has recently been shown to clear brain extracellular solutes and abnormalities in glymphatic clearance system may contribute to both initiation and progression of neurological diseases. Despite that diabetes is known as a risk factor for vascular diseases, little is known how diabetes affects the glymphatic system. The current study is the first investigation of the effect of diabetes on the glymphatic system and the link between alteration of glymphatic clearance and cognitive impairment in Type-2 diabetes mellitus rats. MRI analysis revealed that clearance of cerebrospinal fluid contrast agent Gd-DTPA from the interstitial space was slowed by a factor of three in the hippocampus of Type-2 diabetes mellitus rats compared to the non-DM rats and confirmed by florescence imaging analysis. Cognitive deficits detected by behavioral tests were highly and inversely correlated to the retention of Gd-DTPA contrast and fluorescent tracer in the hippocampus of Type-2 diabetes mellitus rats. Type-2 diabetes mellitus suppresses clearance of interstitial fluid in the hippocampus and hypothalamus, suggesting that an impairment of the glymphatic system contributes to Type-2 diabetes mellitus-induced cognitive deficits. Whole brain MRI provides a sensitive, non-invasive tool to quantitatively evaluate cerebrospinal fluid and interstitial fluid exchange in Type-2 diabetes mellitus and possibly in other neurological disorders, with potential clinical application.