125I-bovine serum albumin (BSA) permeation of the vasculature of 3-wk-old granulation tissue (induced by subcutaneous implantation of polyester fabric) formed in the diabetic milieu was assessed in female BB/W, spontaneously diabetic rats and in male, Sprague-Dawley rats with streptozocin-induced diabetes as well as in corresponding nondiabetic controls. Albumin permeation of new granulation tissue vessels was markedly increased in both groups of diabetic animals relative to that of nondiabetic controls, while albumin permeation of vessels in most other tissues did not differ for controls and diabetics. These observations indicate that the functional integrity of new vessels formed in the diabetic milieu is impaired: (1) to a greater extent than that of older vessels formed before induction of diabetes and (2) relative to new vessels in nondiabetics. The implication of these observations is that molecular constituents of vessels synthesized in the diabetic milieu are quantitatively and/or qualitatively abnormal and/or their incorporation into vessels is defective.