OBJECTIVE To assess the relationship between comorbid depression, diabetes mellitus (DM), and cognitive decline in Mexican Americans aged 65 and older. METHODS Retrospective cohort study with longitudinal analysis. METHODS Texas, New Mexico, Colorado, Arizona, and California. METHODS Hispanic Established Populations for the Epidemiologic Study of the Elderly. METHODS Cognition was assessed using the Mini-Mental State Examination (MMSE). Depression was defined as a score of 16 or greater on the Center for Epidemiologic Studies Depression Scale. DM was defined as according to self-reported history or taking insulin or oral hypoglycemic medication. RESULTS Participants with depression and DM declined an average of 6.5 points on the MMSE; depression only, 4.4 points; DM only, 7.8 points; and neither condition, 4.2 points across the six examination waves. Participants with DM declined an average of 0.18 more points on the MMSE per year (P=.001) than those with neither DM nor depression, and those with comorbid DM and depression declined 0.25 more points per year (P=.002). Depression was associated with significantly greater cognitive decline (β^=-0.11, P=.05) after excluding participants with baseline cognitive impairment (MMSE score≤17). Participants with DM were 1.08 (95% CI=1.03-1.12) times as likely as those with neither DM nor depression, and those with comorbid DM and depression were 1.08 (95% CI=1.01-1.15) times as likely as those with neither DM nor depression to develop severe cognitive impairment per year. CONCLUSIONS DM and comorbid depression and DM are risk factors for cognitive decline in older Mexican Americans. Interventions that reduce the prevalence of depression and DM in Mexican Americans may decrease the number of older adults who experience cognitive decline.