OBJECTIVE People with type 2 diabetes are at increased risk of age-related cognitive decline and dementia. Hypoglycemia is a candidate risk factor, but the direction of association between episodes of severe hypoglycemia and cognitive decline in type 2 diabetes remains uncertain. RESEARCH DESIGN AND METHODS In the Edinburgh Type 2 Diabetes Study, cognitive function was assessed in 831 adultswith type 2 diabetes (aged 60-75 years) at baseline and after 4 years. Scores on seven neuropsychological tests were combined into a standardized general ability factor g. Self-reported history of severe hypoglycemia at baseline (history of hypoglycemia) and at follow-up (incident hypoglycemia) was recorded. RESULTS A history of hypoglycemia was reported by 9.3% of subjects, and 10.2% reported incident hypoglycemia. Incident hypoglycemia was associated with poorer cognitive ability at baseline (age- and sex-adjusted odds ratio for lowest tertile of g 2.04 [95% CI 1.25-3.31], P = 0.004). Both history of hypoglycemia and incident hypoglycemia were also associated with greater cognitive decline during followup (mean follow-up g adjusted for age, sex, and baseline g20.25 vs. 0.03 [P = 0.02] and20.28 vs. 0.04 [P = 0.01], respectively), including after addition of vascular risk factors and cardiovascular and microvascular disease to the models (20.23 vs. 0.03 [P = 0.04] and 20.21 vs. 0.05 [P = 0.03], respectively).