Type 2 diabetes is in essence a vascular disease and is frequently associated with hypertension, macrovascular events, and microvascular complications. Microvascular dysfunction, including impaired recruitment and capillary rarefaction, has been implicated in the pathogenesis of diabetic complications. Microvascular insulin resistance and renin-angiotensin system upregulation are present in diabetes, and each contributes to the development of hypertension and microvascular dysfunction. In the insulin-sensitive state, insulin increases microvascular perfusion by increasing endothelial nitric oxide production, but this effect is abolished by insulin resistance. Angiotensin II, acting via the type 1 receptors, induces inflammation and oxidative stress, leading to impaired insulin signaling, reduced nitric oxide availability, and vasoconstriction. Conversely, it acts on the type 2 receptors to cause vasodilatation. Because substrate and hormonal exchanges occur in the microvasculature, antihypertensive agents targeted to improve microvascular insulin sensitivity and function may have beneficial effects beyond their capacity to lower blood pressure in patients with diabetes.