Resistance to the actions of insulin is strongly associated with the microvascular complications of diabetes. To the extent that insulin resistance leads to hyperglycemia, dyslipidemia and hypertension, this association is not surprising. It is now clear that insulin also has direct actions in the microvasculature that influence the development and progression of microvascular disease. In the healthy state, insulin appears to have only minor effects on vascular function, because of the activation of opposing mediators such as nitric oxide and endothelin-1. Diabetes and obesity, however, are associated with selective insulin resistance in the phosphatidylinositol-3-kinase signaling pathway, which leads to reduced synthesis of nitric oxide, impaired metabolic control and compensatory hyperinsulinemia. By contrast, insulin signaling via extracellular signal-regulated kinase dependent pathways is relatively unaffected in diabetes, tipping the balance of insulin's actions so that they favor abnormal vasoreactivity, angiogenesis, and other pathways implicated in microvascular complications and hypertension. In addition, preferential impairment of nonoxidative glucose metabolism leads to increased intracellular formation of advanced glycation end products, oxidative stress and activation of other pathogenic mediators. Despite a strong temporal association, a causal link between pathway-selective insulin resistance and microvascular damage remains to be established. It is possible that this association reflects a common genotype or phenotype. Nonetheless, insulin resistance remains an important marker of risk and a key target for intervention, because those patients who achieve a greater improvement of insulin sensitivity achieve better microvascular outcomes.