Chronic low-grade inflammation has emerged as a key contributor to the cardiovascular complications of diabetes, however, the mechanisms by which diabetes increases inflammation remain poorly understood. Here, we report that exposure to high glucose (HG) stimulates ectodomain shedding of TNF-alpha from rat aortic smooth muscle cells in culture. Our results show that exposure to HG decreases membrane-associated TNF-alpha. This decrease in unprocessed TNF-alpha was prevented by the aldose reductase (AR) inhibitor sorbinil and AR small interference RNA. Treatment with HG, but not equimolar mannitol or 3-O-methyl glucose, resulted in phosphorylation and activation of TNF-alpha converting enzyme (TACE) (ADAM17), which were attenuated by sorbinil or AR-specific small interference RNA. HG-induced TACE phosphorylation and TNF-alpha processing were also prevented by TNF-alpha protease inhibitor-1, an inhibitor of TACE. Inhibition of protein kinase C (PKC)-delta by rottlerin prevented HG-induced TACE activation and the accumulation of unprocessed TNF-alpha. Treatment with sorbinil decreased elevated levels of circulating TNF-alpha in streptozotocin-treated diabetic rats. Sorbinil treatment also decreased the expression of TNF-alpha, matrix metalloproteinase-2, matrix metalloproteinase-9, and increased tissue inhibitor of metalloproteinase-3 in vascular smooth muscle cells treated with HG and in balloon-injured carotid arteries of diabetic rats. These results indicate that HG-induced TNF-alpha shedding could be attributed to TACE activation, which is regulated, in part, by PKC-delta and AR. Therefore, inhibition of TACE by TNF-alpha protease inhibitor-1, or pharmacological inhibition of PKC-delta or AR may represent useful strategies for treating vascular inflammation associated with diabetes.