Alzheimer's disease (AD) and type 2 diabetes (T2D) are both prevalent in older individuals and have gained significant attention due to alarming rates of increase. The high incidences of these diseases pose a great socioeconomic burden and cause major public health concerns worldwide. A number of studies have established potential links between AD and T2D, supporting the hypothesis that T2D is linked with an increased risk of AD and that controlling diabetes could have a positive impact on the prevention of AD. At present, both diseases lack precise diagnostic approaches for early intervention and effective cure. Further, the currently available diagnostic tools for AD screening are insufficiently sensitive and robust for preventive measures. Although several drugs are used for the treatment of both these diseases, none of these drugs offers complete remission of the disease, merely symptomatic relief. Moreover, these drugs have limited efficacy because of problems such as conventional drug delivery systems beyond the blood brain barrier, a lack of target specificity and diminished potency. From this perspective, the emerging field of nanotechnology has offered new techniques and tools to overcome these challenges. In this review, we discuss the direct and indirect limitations of existing therapies and describe alternative potential nanotechnological approaches that could be utilized to overcome these limitations. New insight in the field of nanomedicine is necessary for early diagnosis, the development of novel drug therapies, the action of drugs and prevention, as well as for gaining an in-depth understanding of the complex biology of both diseases.