Diabetes mellitus is a risk factor for ischemic, but not hemorrhagic stroke. The frequency of transient ischemic attacks is not increased in patients with diabetes compared to the general population. Diabetes mellitus is associated with higher mortality, worse functional outcome, more severe disability after stroke and a higher frequency of recurrent stroke. Diabetes is not associated with an increased size of cerebral infarction. Controversy exists regarding whether hyperglycemia adversely affects stroke outcome or primarily reflects stroke severity. Cerebral blood flow disturbances, impaired cerebrovascular reactivity, and damage to large and small extra- and intracranial cerebral vessels have been found in humans and animals with diabetes. Combinations of some or all of these factors may underlie the high incidence and worse outcome of stroke in patients with diabetes. Knowledge of these pathophysiologic factors will assist in the design of future intervention strategies.