C-Peptide is produced in beta-cells in the pancreas, and secreted into the blood stream in equimolar amounts with insulin. For a long time, C-peptide was considered as an important component in the biosynthesis of insulin, but otherwise believed to possess minimal biological activity. In the recent years, numerous studies demonstrated that lacking C-peptide in type 1 diabetic patients might exert an important role in the development of microvascular complications such as nephropathy or neuropathy. There is increasing evidence that the biological effects of C-peptide are, at least in part, mediated through the modulation of endothelial function and microvascular blood flow. In several tissues, an increase in microvascular and nutritional blood flow could be observed during substitution of physiological amounts of C-peptide. Recent studies confirmed that C-peptide stimulates endothelial NO release by the activation of Ca2+ calmodulin-regulated endothelial NO synthase. A restoration of Na+/K+-ATPase activity during C-peptide supplementation could be observed in erythrocytes and renal tubular cells. The improvement of erythrocyte Na+/K+-ATPase is associated with an increase in erythrocyte deformability, and improved rheological properties. In this article, we consider the role of C-peptide in the context of endothelial function and microvascular blood flow as pathophysiologic components in the development of microvascular complications in patients with diabetes mellitus and loss of beta-cell function.