In this article, the cellular and molecular mechanisms of diabetic complications have been reviewed. Hyperglycemia-induced mechanisms that may induce vascular dysfunction in specific sites of diabetic microvascular damage include increased polyol pathway flux, altered cellular redox state, increased formation of diacylglycerol and the subsequent activation of specific PKC isoforms, and accelerated nonenzymatic formation of advanced glycation endproducts. Several of these mechanisms may be responsible for the potentially damaging overproduction of reactive oxygen species observed with hyperglycemia. Each of these mechanisms may contribute to the known pathophysiologic features of diabetic complications by a number of mechanisms, including the upregulation of cytokines and growth factors. Diabetic macrovascular disease may arise more from insulin resistance than from hyperglycemia, and the authors speculate that this may reflect a selective loss of insulin-dependent vascular homeostasis.