The small and large vessel disease associated with diabetes mellitus is responsible for its morbidity and mortality. Although much of the pathogenesis remains to be clarified, the role of hyperinsulinemia and hyperglycemia per se in the progression of vascular disease is beginning to emerge. Hyperinsulinemia increases the release of very low density lipoprotein (VLDL) and may also be responsible for the low HDL cholesterol levels in patients with diabetes. Hyperinsulinemia also contributes to increased blood pressure, which independently promotes vascular disease. High glucose concentrations have direct influence on intracellular signal transduction, including effects on sorbitol pathway and associated changes of pyridine nucleotides, the de novo synthesis of diacylglycerol with subsequent stimulation of protein kinase C, and possibly changes in the cellular generation of myoinositol. Hyperglycemia also exerts long-lasting changes in cellular function, which result from non-enzymatic glycosylation of matrix and membrane proteins with subsequent binding of these proteins to specific receptors. These receptors are termed the advanced glycosylation end-products (AGE) receptors. Their activation leads to an increased release of cytokines and growth factors including PDGF, interleukins, TNF-alpha, and TGF-beta, all of which may act concomitantly in the disease process.