We have found a defect in the ouabain-sensitive Na+, K+-ATPase (Na+ pump, EC 3.6.1.37) of erythrocytes from streptozocin diabetic rats. This defect was accompanied by an increase in cell volume and osmotic fragility and a decrease in the cytosolic K+/Na+ ratio. There was also a doubling in the time needed for diabetic erythrocytes to pass through 4.7-micron channels in a polycarbonate filter. Our data are consistent with a primary defect in the erythrocyte Na+ pump and secondary changes in cell volume, osmotic fragility, K+/Na+ ratio, and cell filterability. All were reversed or prevented in vivo by insulin or the aldose reductase inhibitor Sorbinil. Protein kinase C agonists (phorbol ester and diacylglycerol) and agonist precursor (myoinositol) reversed the Na+ pump lesion, suggesting that protein kinase C-dependent phosphorylation of the 100-kDa subunit regulates Na+ pump activity and that insulin can influence erythrocyte protein kinase C activity. Ouabain inhibition of the erythrocyte Na+ pump also produced increases in cell size and reductions in rates of filtration. Theoretical treatment of the volume changes also predicts reduction in filterability as a consequence of cell swelling. We suggest that enlarged erythrocytes could play a role in the evolution of the microvascular changes of diabetes mellitus.