Endothelial dysfunction is one manifestation of the many changes induced in the arterial wall by the metabolic abnormalities accompanying diabetes and insulin resistance. In type 1 diabetes, endothelial dysfunction is most consistently found in advanced stages of the disease. In other patients, it is associated with nondiabetic insulin resistance and probably precedes type 2 diabetes. In obesity and insulin resistance, increased secretion of proinflammatory cytokines and decreased secretion of adiponectin from adipose tissue, increased circulating levels of free fatty acids, and postprandial hyperglycemia can all alter gene expression and cell signaling in vascular endothelium, cause vascular insulin resistance, and change the release of endothelium-derived factors. In diabetes, sustained hyperglycemia causes increased intracellular concentrations of glucose metabolites in endothelial cells. These changes cause mitochondrial dysfunction, increased oxidative stress, and activation of protein kinase C. Dysfunctional endothelium displays activation of vascular NADPH oxidase, uncoupling of endothelial nitric oxide synthase, increased expression of endothelin 1, a changed balance between the production of vasodilator and vasoconstrictor prostanoids, and induction of adhesion molecules. This review describes how these and other changes influence endothelium-dependent vasodilation in patients with insulin resistance and diabetes. The clinical utility of endothelial function testing and future therapeutic targets is also discussed.