Aims/hypothesis Plasma ATP is a potent vasodilator and is thought to play a role in the local regulation of blood flow. Type 2 diabetes is associated with reduced tissue perfusion. We aimed to examine whether individuals with type 2 diabetes have reduced plasma ATP concentrations compared with healthy control participants (case-control design). Methods We measured femoral arterial and venous plasma ATP levels with the intravascular microdialysis technique during normoxia, hypoxia and one-legged knee-extensor exercise (10 W and 30 W) in nine participants with type 2 diabetes and eight control participants. In addition, we infused acetylcholine (ACh), sodium nitroprusside (SNP) and ATP into the femoral artery to assess vascular function and ATP signalling. Results Individuals with type 2 diabetes had a lower leg blood flow (LBF; 2.9 ± 0.1 l/min) compared with the control participants (3.2 ± 0.1 l/min) during exercise (p < 0.05), in parallel with lower venous plasma ATP concentration (205 ± 35 vs 431 ± 72 nmol/l; p < 0.05). During systemic hypoxia, LBF increased from 0.35 ± 0.04 to 0.54 ± 0.06 l/min in control individuals, whereas it did not increase (0.25 ± 0.04 vs 0.31 ± 0.03 l/min) in the those with type 2 diabetes and was lower than in the control individuals (p < 0.05). Hypoxia increased venous plasma ATP levels in both groups (p < 0.05), but the increase was higher in control individuals (90 ± 26 nmol/l) compared to those with type 2 diabetes (18 ± 5 nmol/l). LBF and vascular conductance were lower during ATP (0.15 and 0.4 μmol min −1 [kg leg mass] −1) and ACh (100 μg min −1 [kg leg mass] −1) infusion in individuals with type 2 diabetes compared with the control participants (p < 0.05), whereas there was no difference during SNP infusion. Conclusions/interpretation These findings demonstrate that individuals with type 2 diabetes have lower plasma ATP concentrations during exercise and hypoxia compared with control individuals, and this occurs in parallel with lower blood flow. Moreover, individuals with type 2 diabetes have a reduced vasodilatory response to infused ATP. These impairments in the ATP system are both likely to contribute to the reduced tissue perfusion associated with type 2 diabetes. Trial registration ClinicalTrials.gov NCT02001766.