The present study has been undertaken to explore the potential of liver X receptor (LXR) modulator, T0901317, in dementia induced by streptozotocin (STZ) and cholesterol enriched diet. Streptozotocin [STZ, 3 mg/kg, injected intracerebroventricular (i.c.v.)] and high fat diet (HFD, administered for 90 days) were used to induce dementia in separate groups of Swiss albino mice. The Morris water maze (MWM) test was used to evaluate the effect on cognitive functions. Brain homogenate was used to perform a series of biochemical studies such as, estimation of brain reduced glutathione (GSH), thiobarbituric acid reactive species (TBARS), acetylcholinestrase (AChE) activity and myeloperoxidase (MPO) levels. Serum cholesterol was also determined. STZ and HFD produced a significant decline in MWM performance of the animals, reflecting impairment of learning and memory. STZ/HFD treated mice exhibited a noticeable accentuation of AChE activity, TBARS and MPO levels along with reduction in GSH level. Further the stained micrographs of STZ/HFD treated mice indicated pathological changes, severe neutrophilic infiltration and amyloid deposition. T0901317 treatment significantly attenuated STZ and HFD-induced memory deficits, biochemical and histopathological alterations as well as HFD induced rise in cholesterol content. Hence the study indicates the potential role of liver X receptors in the pathophysiology of dementia. Therefore, the results demonstrate the defensive role of T0901317 in memory dysfunctions which may probably be attributed to its anti-cholinesterase, anti-oxidative, anti-inflammatory and cholesterol lowering effects.