Insulin deficiency and hyperglycaemia in type 1 (insulin-dependent) diabetes mellitus produce lipid abnormalities, which can be corrected by appropriate insulin therapy. Diabetic nephropathy, which is the main risk factor for coronary heart disease (CHD) in type 1 diabetes, causes pro-atherosclerotic changes in lipid metabolism. Detection and treatment of elevated cholesterol levels is likely to be of benefit in these patients. Type 2 (noninsulin-dependent) diabetes mellitus is associated with abnormal lipid metabolism, even when glycaemic control is good and nephropathy absent. Elevated triglyceride levels, reduced high density lipoprotein (HDL) cholesterol and a preponderance of small, dense low density lipoprotein (LDL) particles are the key abnormalities that constitute diabetic dyslipidaemia. The prevalence of hypercholesterolaemia is the same as for the nondiabetic population, but the relative risk of CHD is greatly increased at every level of cholesterol. Based on effectiveness, tolerability and clinical trial results, treatment with HMG-CoA reductase inhibitors to lower LDL cholesterol is recommended as primary therapy. These agents are also moderately effective at reducing triglyceride and increasing HDL cholesterol levels. If hypertriglyceridaemia predominates, treatment with fibric acid derivatives is appropriate, although there is currently only limited clinical trial evidence that the risk of CHD will be reduced. In type 1 diabetes, but particularly in type 2 diabetes, lipid disorders are likely to contribute significantly to the increased risk of macrovascular complications. especially CHD. Management of the disordered lipid metabolism should be given a high priority in the clinical care of all patients with diabetes.