Stromal-derived factor-1 (SDF-1) is a critical chemokine for endothelial progenitor cell (EPC) recruitment to areas of ischemia, allowing these cells to participate in compensatory angiogenesis. The SDF-1 receptor, CXCR4, is expressed in developing blood vessels as well as on CD34+ EPCs. We describe that picomolar and nanomolar concentrations of SDF-1 differentially influence neovascularization, inducing CD34+ cell migration and EPC tube formation. CD34+ cells isolated from diabetic patients demonstrate a marked defect in migration to SDF-1. This defect is associated, in some but not all patients, with a cell surface activity of CD26/dipeptidyl peptidase IV, an enzyme that inactivates SDF-1. Diabetic CD34+ cells also do not migrate in response to vascular endothelial growth factor and are structurally rigid. However, incubating CD34+ cells with a nitric oxide (NO) donor corrects this migration defect and corrects the cell deformability. In addition, exogenous NO alters vasodilator-stimulated phosphoprotein and mammalian-enabled distribution in EPCs. These data support a common downstream cytoskeletal alteration in diabetic CD34+ cells that is independent of growth factor receptor activation and is correctable with exogenous NO. This inability of diabetic EPCs to respond to SDF-1 may contribute to aberrant tissue vascularization and endothelial repair in diabetic patients.