Diabetes mellitus (DM) is related to an increase in the incidence of vascular dementia. Inflammation is an important cause of endothelial dysfunction and cognitive deficits. The anti -tumor necrosis factor (TNF)-alpha fusion protein etanercept has been reported to exhibit memory-enhancing effects and endothelial protection. We tested the effect of etanercept on the cognitive endpoints and compared it with the cognitive dysfunction in streptozotocin (STZ)-induced DM rats by using the Morris water maze test (MWMT) and passive avoidance test (PAT). Systolic blood pressure (SBP), thoracic endothelial function, endothelial nitric oxide synthase (eNOS) expression, and hippocampal brain-derived neurotrophic factor (BDNF) expression were assessed. Thirty days after the induction of DM, rats exhibited severe learning and memory deficits associated with endothelial dysfunction and decreased expression of eNOS and BDNF. Chronic treatment with etanercept (0.8 mg/kg, s.c., every week for 30 days) improved cognitive performance, endothelial function, and expression of eNOS and BDNF in DM rats. Furthermore, the memory-improving effects of etanercept were independent of hyperglycemia. These data suggest that etanercept treatment prevents changes in endothelial function, eNOS expression, and hippocampal expression of BDNF and, consequently, vascular dementia in DM rats.