Vascular dysfunction, low-grade inflammation, insulin resistance, and impaired fibrinolysis have each been reported to be present in type 2 diabetes, but their relationships, and the role of obesity, have not been investigated. We measured insulin sensitivity (euglycemic clamp), forearm blood flow responses to graded local acetylcholine (Ach) and sodium nitroprusside (SNP) infusions, plasma concentrations of tumor necrosis factor (TNF)-alpha, interleukin (IL)-6, von Willebrand factor (vWF), plasminogen activator inhibitor (PAI)-1, tissue plasminogen activator (tPA), and high-sensitivity C-reactive protein (hs-CRP) in 81 diabetic patients. When patients were stratified by insulin resistance, more severe insulin resistance was associated (P < 0.05) with overweight, central fat distribution, hypertension, and dyslipidemia (with similar sex distribution, age, fasting plasma glucose, and HbA1c). With regard to vascular function, both endothelium-dependent (Ach) (-22, -40, and -52%; P < 0.0001) and -independent (SNP) (-3, -7, and -27%; P < 0.02) vasodilatation were progressively reduced across insulin resistance tertiles. In multivariate analysis, inflammatory markers (IL-6, hs-CRP, and TNF-alpha) were independently associated with insulin resistance and fasting glycemia, fibrinolytic markers PAI-1 and tPA with insulin resistance and central fat distribution, and vascular indexes (vWF, Ach, and SNP vasodilation) with insulin resistance and obesity or cytokines (TNF-alpha or IL-6). In type 2 diabetes, insulin resistance is associated with vascular dysfunction/damage, impaired fibrinolysis, and low-grade inflammation independently of obesity and poor glycemic control.