A naturally occurring bile acid, ursodeoxycholic acid (UDCA), is known to alleviate endoplasmic reticulum (ER) stress at the cellular level. However, the detailed action mechanisms of UDCA in atherosclerosis are not fully understood. In this study, we demonstrated whether UDCA exerts anti-atherogenic activity in diabetic atherosclerosis by targeting ER stress and "receptor for advanced glycation endproduct" (RAGE) signaling. UDCA markedly reduced ER stress, RAGE expression, and pro-inflammatory responses [including NF-κB activation and reactive oxygen species (ROS) production] induced in endothelial cells (ECs) by high glucose (HG). In particular, UDCA inhibited HG-induced ROS production by increasing the Nrf2 level. In macrophages, UDCA also blocked HG-induced RAGE and pro-inflammatory cytokine expression and inhibited foam cell formation via upregulation of the ATP-binding cassette (ABC) transporters, ABCA1 and ABCG1. In the diabetic mouse model, UDCA inhibited atheromatous plaque formation by decreasing ER stress, and the levels of RAGE and adhesion molecules. In conclusion, UDCA exerts an anti-atherogenic activity in diabetic atherosclerosis by targeting both ER stress and RAGE signaling. Our work implicates UDCA as a potential therapeutic agent for prevention or treatment of diabetic atherosclerosis.