In addition to hyperglycemia, diabetes is associated with increased levels of circulating free fatty acids, lactate, and branched chain amino acids, all of which produce an excessive reduced form of pyridine nucleotides NADH (reductive stress) in the cytosol and mitochondria. Our studies suggest that cytosolic NADH reductive stress under high glucose is largely caused by increased flux of glucose through polyol (sorbitol) pathway consisting of aldose reductase and sorbitol dehydrogenase. Inhibition of aldose reductase that blocks the polyol pathway has been shown to ameliorate diabetic neuropathy in humans. Cytosolic NADH reductive stress is predicted to increase production of diglycerides, reactive oxygen species, and methylglyoxal. Recent studies indicate that increasing NADH affects gene expression through the NADH activating transcriptional co-repressor, C-terminal binding protein (CtBP). In addition, it has been shown that the NADH utilizing enzyme, glyceraldehyde-3-phosphate dehydrogenase, participates as transcriptional regulator. These findings testify to the importance of NADH redox balance in cell biology and pathogenesis of diabetes and its complications. For example, through CtBP, the high NADH to NAD(+) ratio decreases an expression of SirT1, the protein inducing longevity and anti-apoptosis. This review covers metabolic cascades causing reductive stress and oxidative stress in diabetes after a brief introduction of the redox concept.