Type 2 diabetes mellitus (T2DM) patients show brain tissue changes in mood and cognitive regulatory sites, but the nature and extent of tissue injury and their associations with symptoms are unclear. Our aim was to examine brain tissue damage in T2DM over controls using mean diffusivity (MD) computed from diffusion tensor imaging (DTI), and assess correlations with mood and cognitive symptoms in T2DM. We collected DTI series (MRI), mood, and cognitive data, from 169 subjects (68 T2DM and 101 controls). Whole-brain MD-maps were calculated, normalized, smoothed, and compared between groups, as well as correlated with mood and cognition scores in T2DM subjects. Type 2 diabetes patients showed altered cognitive and mood functions over control subjects. Multiple brain sites in T2DM patients showed elevated MD values, indicating chronic tissue changes, including the cerebellum, insula, and frontal and prefrontal cortices, cingulate, and lingual gyrus. Associations between MD values and mood and cognition scores appeared in brain sites mediating these functions. Type 2 diabetes patients show predominantly chronic brain tissue changes in areas mediating mood and cognition functions, and tissue changes from those regions correlate with mood and cognitive symptoms suggesting that the microstructural brain changes may account for the observed functional deficits.