Endothelial damage, with loss of the vascular protective effects of nitric oxide (NO), is an important early step in the development of microvascular and macrovascular complications of diabetes. Endothelial dysfunction is closely associated with diabetic nephropathy in type 1 and 2 diabetes. In this review we will discuss the mechanisms by which hyperglycemia may cause kidney damage and endothelial dysfunction. Hyperglycemia causes microvascular dysfunction, which contributes to the development of end stage renal disease. Determining the role of endothelial abnormalities in the development of diabetic nephropathy is critical to understanding the etiology and pathogenesis of the microvascular complications of diabetes. Endothelial function can be assessed by invasive and noninvasive techniques both in the coronary and peripheral circulation. Endothelial dysfunction is considered a reversible phenomenon; pharmacological intervention with hypolipidemic agents, insulin sensitizers, ACE inhibitors and angiotensin II receptor blockers (ARB) as well as dietary and lifestyle modifications have been shown to reverse it.