Background and Purpose Diabetes-induced cognitive impairment (DCI) is a common complication in diabetic patients with an unclear pathogenesis, and there are currently no approved therapeutic drugs available. Iguratimod (IGU) is a novel small molecule immunosuppressant used to treat rheumatoid arthritis. Given the emerging evidence revealing that immune responses mediate cognitive impairment, our study is the first to investigate the effect of IGU on cognitive function in DCI mice and explore its underlying mechanisms. Experimental Approach We used C57BL/6J mice to establish a DCI mouse model by providing a high-fat diet and injecting streptozotocin to test the cognitive protective effect of IGU on DCI mice and explore its mechanism. Other techniques used included the water maze, single-cell transcriptomics, immunofluorescence, and flow cytometry. Key Results IGU maintained cellular homeostasis in the brains of DCI mice, particularly by significantly reducing the proportion of B lymphocytes and inhibiting B cell activation. Similarly, we also found that IGU reduced the proportion of CD8 T cells and the expression of cytotoxic factors in the brains of DCI mice. Additionally, IGU inhibited the activation of B cells and the cytotoxicity of CD8 T cells in the peripheral blood of DCI mice. Notably, our clinical cohort study also found that the proportion of Siglec-g + B cells in the peripheral blood of DCI patients was significantly elevated and negatively correlated with cognitive scores, which might be a potential biomarker of DCI. Conclusions and Implications IGU effectively ameliorates the cognitive function of DCI mice by inhibiting B cell activation and CD8 T cell cytotoxicity, which may be a potential alternative drug for the treatment of DCI.