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The incidence of dementia is higher in diabetic patients, but no effective treatment has been developed. This study showed that rat bone marrow mesenchymal stem cells (BM-MSCs) can improve the cognitive impairments of STZ-diabetic mice by repairing damaged neurons and astrocytes. The Morris water maze test demonstrated that cognitive impairments induced by diabetes were significantly improved by intravenous injection of BM-MSCs. In the CA1 region of the hippocampus, degeneration of neurons and astrocytes, as well as synaptic loss, were prominent in diabetes, and BM-MSC treatment successfully normalized them. Since a limited number of donor BM-MSCs was observed in the brain parenchyma, we hypothesized that humoral factors, especially exosomes released from BM-MSCs, act on damaged neurons and astrocytes. To investigate the effectiveness of exosomes for treatment of diabetes-induced cognitive impairment, exosomes were purified from the culture media and injected intracerebroventricularly into diabetic mice. Recovery of cognitive impairment and histological abnormalities similar to that seen with BM-MSC injection was found following exosome treatment. Use of fluorescence-labeled exosomes demonstrated that injected exosomes were internalized into astrocytes and neurons; these subsequently reversed the dysfunction. The present results indicate that exosomes derived from BM-MSCs might be a promising therapeutic tool for diabetes-induced cognitive impairment.