Endothelial dysfunction is a critical factor in the development of vascular disease in patients with diabetes mellitus. Maintenance of the vascular tone and luminal diameter of a blood vessel is dependent on the net balance of vasoconstrictor and vasodilator forces. In both diabetes and obesity, vascular reactivity is abnormal. After ischemia, carbon dioxide challenge, thermal challenge, or exercise, individuals with diabetes do not exhibit the increase in blood flow or vasodilation observed in persons without diabetes. The mechanisms involved in abnormal reactivity may include both the endothelium and vascular smooth muscle. Major vasodilator factors that act on vascular smooth muscle cells are nitric oxide, prostacyclin, and hyperpolarizing factor. The main vasoconstrictors are endothelin, angiotensin II, norepinephrine, serotonin, and thromboxane A(2). In patients with diabetes, there is an increase in vasoconstrictors and a decrease in vasodilators. Thiazolidinediones (TZDs) improve vasodilative responses, which may be of importance in the treatment of vascular disease. The TZDs have anti-inflammatory effects and suppress free fatty acids and reactive oxygen species at the endothelial level, which may contribute to the improved vascular reactivity observed in patients treated with these agents. In addition, these effects of TZDs may have implications for reducing the incidence and severity of atherosclerosis in the long term.