Diabetes is associated with deficits in memory and cognitive functions and sustained inflammation. Recently, involvement of NF-κB (nuclear factor kappa-light-chain-enhancer of activated B cells) has been postulated in many cognitive functions, immune system and inflammation. Despite of role of NF-κB in inflammation, a large gap remains in understanding of the mechanisms and consequences of NF-κB activation in the central nervous system.In this study, we have evaluated the effects of NF-κB activation inhibitor on memory function, neurotransmitter levels changes and brain inflammatory cytokines in type-2 diabetic rats. BAY 11-7082 (BAY) was used as a pharmacological inhibitor of IκBα (inhibitor of kappa B alpha) phosphorylation to block NF-κB activation. Type-2 diabetic rats showed significant memory impairment at 15th week. Three weeks BAY treatment produced significant increase in Morris water maze test learning and memory performance. Diabetic animals also showed improved performance in passive avoidance and Y-maze test paradigm following treatment with NF-κB inhibitor BAY. BAY treatment did not show any significant effect on blood glucose and insulin levels. NF-κB inhibition significantly reduced neuroinflammation as evidenced by decrease in IL-6 and TNF-α levels. BAY treatment in diabetic rats also increased the phosphorylation of CREB which indicates that the NF-κB activation inhibitor engage a CREB regulated mechanism in-vivo. Moreover, BAY also reversed the alterations in brain glutamate and GABA levels in diabetic rats. These findings corroborate that NF-κB inhibition may be an effective treatment strategy in diabetes associated cognitive deficits.