Endothelial dysfunction associated with diabetes and cardiovascular disease is characterized by changes in vasoregulation, enhanced generation of reactive oxygen intermediates, inflammatory activation, and altered barrier function. These endothelial alterations contribute to excess cardiovascular disease in diabetes, but may also play a role in the pathogenesis of diabetes, especially type 2. The mechanisms underlying endothelial dysfunction in diabetes differ between type 1 (T1D) and type 2 diabetes (T2D): hyperglycemia contributes to endothelial dysfunction in all individuals with diabetes, whereas the causative mechanisms in T2D also include impaired insulin signaling in endothelial cells, dyslipidemia and altered secretion of bioactive substances (adipokines) by adipose tissue. The close association of so-called perivascular adipose tissue with arteries and arterioles facilitates the exposure of vascular endothelium to adipokines, particularly if inflammation activates the adipose tissue. Glucose and adipokines activate specific intracellular signaling pathways in endothelium, which in concert result in endothelial dysfunction in diabetes. Here, we review the characteristics of endothelial dysfunction in diabetes, the causative mechanisms involved and the role of endothelial dysfunction(s) in the pathogenesis of T2D. Finally, we will discuss the therapeutic potential of endothelial dysfunction in T2D.