Clinical studies have identified a correlation between type-2 diabetes mellitus and cognitive decrements en route to the onset of Alzheimer’s disease (AD). Recent studies have established that post-translational modifications of the amyloid β (Aβ) peptide occur under hyperglycemic conditions; particularly, the process of glycation exacerbates its neurotoxicity and accelerates AD progression. In view of the assertion that macromolecular crowding has an altering effect on protein self-assembly, it is crucial to characterize the effects of hyperglycemic conditions via crowding on Aβ self-assembly. Toward this purpose, fully atomistic molecular dynamics simulations were performed to study the effects of glucose crowding on Aβ dimerization, which is the smallest known neurotoxic species. The dimers formed in the glucose-crowded environment were found to have weaker associations as compared to that of those formed in water. Binding free energy calculations show that the reduced binding strength of the dimers can be mainly attributed to the overall weakening of the dispersion interactions correlated with substantial loss of interpeptide contacts in the hydrophobic patches of the Aβ units. Analysis to discern the differential solvation pattern in the glucose-crowded and pure water systems revealed that glucose molecules cluster around the protein, at a distance of 5–7 Å, which traps the water molecules in close association with the protein surface. This preferential exclusion of glucose molecules and resulting hydration of the Aβ peptides has a screening effect on the hydrophobic interactions, which in turn diminishes the binding strength of the resulting dimers. Our results imply that physical effects attributed to crowded hyperglycemic environments are incapable of solely promoting Aβ self-assembly, indicating that further mechanistic studies are required to provide insights into the self-assembly of post-translationally modified Aβ peptides, known to possess aggravated toxicity, under these conditions.