Dyslipidemia is a major factor responsible for coronary heart disease and its reduction decreases coronary risk in patients with diabetes mellitus. However, the association of dyslipidemia with microvascular complications and the effect of intervention with lipid-lowering therapy in diabetes have been less investigated. We present the systematic review of association and intervention studies pertaining to dyslipidemia and microvascular disease in diabetes and also review possible mechanisms. Dyslipidemia may cause or exacerbate diabetic retinopathy and nephropathy by alterations in the coagulation-fibrinolytic system, changes in membrane permeability, damage to endothelial cells and increased atherosclerosis. Hyperlipidemia is associated with faster decline in glomerular filtration rate and progression of albuminuria and nephropathy. Recent evidence also suggests a role of lipoprotein(a) in progression of retinopathy and nephropathy in patients with diabetes mellitus. Lipid-lowering therapy, using single agents or a combination of drugs may significantly benefit diabetic retinopathy and diabetic nephropathy. In particular, hydroxymethyl glutaryl coenzyme A reductase inhibitors may be effective in preventing or retarding the progression of microvascular complications because of their powerful lipid-lowering effects and other additional mechanisms. However, most of the data are based on short-term studies, and need to be ascertained in long-term studies. Until more specific guidelines are available, aggressive management of diabetic dyslipidemia, according to currently accepted guidelines, should be continued for the prevention of macrovascular disease which would also benefit microvascular complications.