There is emerging evidence from healthy individuals, as well as direct and indirect evidence from psychiatric and neurological patients with disease-related hippocampal atrophy, linking the cortisol awakening response (CAR) to hippocampal volume. Type 2 diabetes mellitus (T2DM) is a metabolic disease that is also accompanied by hippocampal atrophy, and therefore can serve as a model for ascertaining the relationship between CAR and hippocampal volume. We contrasted a group of 18 individuals with T2DM with 12 matched controls on MRI-based hippocampal volume and salivary diurnal cortisol profile including CAR. Individuals with T2DM had smaller hippocampal volumes and exhibited a blunting of the CAR relative to controls, while diurnal cortisol was not affected. Across all subjects, fasting insulin and hippocampal volume were associated with the CAR, independent of diagnosis. Our findings support the hypothesis that hippocampal integrity is an important predictor of the CAR.