BACKGROUND: Hypoglycemic pharmacotherapy interventions for alleviating the risk of dementia remain controversial, particularly regarding dipeptidyl peptidase 4 (DPP4) inhibitors vs metformin. Our objective was to investigate whether the initiation of DPP4 inhibitors, as opposed to metformin, was linked to a reduced risk of dementia. METHODS: We included individuals with type 2 diabetes over 40 years old who were new users of DPP4 inhibitors or metformin in the Chinese Renal Disease Data System database between 2009 and 2020. The study employed Kaplan-Meier and Cox regression for survival analysis and the Fine and Gray model for the competing risk of death. RESULTS: Following a 1:1 propensity score matching, the analysis included 3626 DPP4 inhibitor new users and an equal number of metformin new users. After adjusting for potential confounders, the utilization of DPP4 inhibitors was associated with a decreased risk of all-cause dementia compared to metformin [hazard ratio (HR) 0.63, 95% confidence interval (CI) 0.45-0.89]. Subgroup analysis revealed that the utilization of DPP4 inhibitors was associated with a reduced incidence of dementia in individuals who initiated drug therapy at the age of 60 years or older (HR 0.69, 95% CI 0.48-0.98), those without baseline macrovascular complications (HR 0.62, 95% CI 0.41-0.96), and those without baseline microvascular complications (HR 0.67, 95% CI 0.47-0.98). CONCLUSION: In this real-world study, we found that DPP4 inhibitors presented an association with a lower risk of dementia in individuals with type 2 diabetes than metformin, particularly in older people and those without diabetes-related comorbidities.