Objective Cognitive impairments in type 1 diabetes may result from hyperglycemia‐associated cerebral microangiopathy. We aimed to identify cerebral microangiopathy and skin microvascular dysfunction—as a surrogate marker for generalized microvascular function—as predictors of cognitive performance over time. Methods In this prospective cohort study, 25 type 1 diabetes patients with proliferative retinopathy and 25 matched healthy controls underwent neurocognitive testing at baseline and after follow‐up (3.8 ± 0.8 years). At baseline, 1.5‐T cerebral magnetic resonance imaging was used to detect WML and cerebral microbleeds. Skin capillary perfusion was assessed by means of capillary microscopy. Results In type 1 diabetes patients, but not in healthy controls, the presence of WML (ß = −0.419; P = 0.037) as well as lower skin capillary perfusion (baseline: ß = 0.753; P < 0.001; peak hyperemia: ß = 0.743; P = 0.001; venous occlusion: ß = 0.675; P = 0.003; capillary recruitment: ß = 0.549; P = 0.022) at baseline was associated with lower cognitive performance over time, independent of age, sex, HbA1c, and severe hypoglycemia. The relationship between WML and lower cognitive performance was significantly reduced after adjusting for capillary perfusion. Conclusions These data fit the hypothesis that cerebral microangiopathy is a manifestation of generalized microvascular dysfunction, leading to lower cognitive performance.