Vascular endothelial dysfunction is an early marker of atherosclerosis seen in type 2 diabetes (T2DM). Circulating endothelial progenitor cell (EPC) is involved in the neovasculogenesis and maintenance of vascular homeostasis, whose impairment may have an important role in the pathogenesis of diabetic vasculopathy. This study was performed to investigate the relationship between vascular endothelial function and circulating EPC number in T2DM. A total of 46 newly diagnosed T2DM patients (DM group) and 51 healthy subjects (NG group) were recruited. Metformin was administered to all patients for 16 weeks. Endothelial function was assessed by flow-mediated brachial artery dilatation (FMD). EPC was defined by CD45( low)/CD34(+)/VEGFR2(+) and quantified by flow cytometry. The EPC number in the DM group was significantly lower than that in the NG group (p < 0.001), and improved markedly after treatment (p < 0.001). The results of FMD were consistent with EPC variations among the three groups (p < 0.001). In multivariate regression analysis, the EPC number was an independent risk factor for FMD at baseline (p < 0.05). The absolute changes of EPC number showed significant correlation with the changes of FMD before and after treatment (r = 0.63, p < 0.001). This study demonstrated that the circulating EPC number was related to endothelial function and could be considered as a surrogate biological marker of endothelial function for T2DM.