Cerebral small vessel diseases play a crucial role in both vascular and non-vascular dementias. The location of white matter hyperintensities (WMHs), a neuroimaging marker of cerebral small vessel disease, has been found to vary between different types of dementias, and those in the basal ganglia (BG) have been particularly associated with vascular cognitive impairment (VCI). However, anatomical variation of WMHs across BG nuclei and its effect on brain network dysconnectivity has not been clearly elucidated. The study sample consisted of 40 patients with amnestic mild cognitive impairment (aMCI), 40 with subcortical vascular MCI (SVMCI), and 40 healthy control subjects. We examined the volume of WMH using T2-weighted magnetic resonance imaging. We also assessed the disturbances in BG-cortical communication by measuring resting-state functional connectivity (rsFC) from the functional magnetic resonance imaging signal. WMHs were more pronounced in the SVMCI group particularly in the caudate regions. In SVMCI patients, while higher WMHs in the dorsal caudate correlated with weaker FC with executive control regions and worse immediate recall performance, WMHs in the ventral caudate were associated with weaker FC with anterior default mode regions and worse delayed recall performance. In contrast, in aMCI patients, BG WMHs were not correlated with their changes in functional connectivity changes, which showed weaker connectivity with almost all BG structures, rather than restricting to specific BG subdivisions as observed in the SVMCI group. Our findings demonstrate that heterogeneously distributed BG WMHs are associated with changes in functional network interactions and verbal episodic memory performance only in SVMCI patients, which establishes a link between cerebrovascular-related structural abnormality, functional integrity of BG circuits, and episodic memory impairments in SVMCI, and may reflect a differential role of the cerebrovascular pathology in disrupting network-level communications and cognition between Alzheimer's and subcortical vascular dementia.