Apolipoprotein E (APOE) ε4 gene allele and type 2 diabetes mellitus (T2DM) are prime risk factors for Alzheimer’s disease (AD). Despite evidence linking T2DM and apoE4, the mechanism underlying their interaction is yet to be determined. In the present study, we employed a model of APOE-targeted replacement mice and high-fat diet (HFD)-induced insulin resistance to investigate diabetic mechanisms associated with apoE4 pathology and the extent to which they are driven by peripheral and central processes. Results obtained revealed an intriguing pattern, in which under basal conditions, apoE4 mice display impaired glucose and insulin tolerance and decreased insulin secretion, as well as cognitive and sensorimotor characteristics relative to apoE3 mice, while the HFD impairs apoE3 mice without significantly affecting apoE4 mice. Measurements of weight and fasting blood glucose levels increased in a time-dependent manner following the HFD, though no effect of genotype was observed. Interestingly, sciatic electrophysiological and skin intra-epidermal nerve fiber density (IENFD) peripheral measurements were not affected by the APOE genotype or HFD, suggesting that the observed sensorimotor and cognitive phenotypes are related to central nervous system processes. Indeed, measurements of hippocampal insulin receptor and glycogen synthase kinase-3β (GSK-3β) activation revealed a pattern similar to that obtained in the behavioral measurements while Akt activation presented a dominant effect of diet. HFD manipulation induced genotype-independent hyperlipidation of apoE, and reduced levels of brain apoE in apoE3 mice, rendering them similar to apoE4 mice, whose brain apoE levels were not affected by the diet. No such effect was observed in the peripheral plasma levels of apoE, suggesting that the pathological effects of apoE4 under the control diet and apoE3 under HFD conditions are related to the decreased levels of brain apoE. Taken together, our data suggests that diabetic mechanisms play an important role in mediating the pathological effects of apoE4 and that consequently, diabetic-related therapy may be useful in treating apoE4 pathology in AD.