Type 1 diabetes mellitus (DM) is a strong risk factor for the development of diabetic cardiomyopathy (DCM) which is the leading cause of morbidity and mortality in the type 1 diabetic patients. Stem cells may act as a therapeutic agent for the repair of DCM. However, deteriorated functional abilities and survival of stem cells derived from type 1 diabetic subjects need to be overcome for obtaining potential outcome of the stem cell therapy. Diazoxide (DZ) a highly selective mitochondrial ATP-sensitive K(+) channel opener has been previously shown to improve the ability of mesenchymal stem cells for the repair of heart failure. In the present study, we evaluated the effects of DZ preconditioning in improving the ability of streptozotocin-induced type 1 diabetes affected bone marrow-derived endothelial progenitor cells (DM-EPCs) for the repair of DCM in the type 1 diabetic rats. DM-EPCs were characterized by immunocytochemistry, flow cytometry, and reverse transcriptase PCR for endothelial cell-specific markers like vWF, VE cadherin, VEGFR2, PECAM, CD34, and eNOS. In vitro studies included preconditioning of DM-EPCs with 200 μM DZ for 30 min followed by exposure to either 200 μM H2O2 for 2 h (for oxidative stress induction) or 30 mM glucose media (for induction of hyperglycemic stress) for 48 h. Non-preconditioned EPCs with and without exposure to H2O2 and 30 mM high glucose served as controls. These cells were then evaluated for survival (by MTT and XTT cell viability assays), senescence, paracrine potential (by ELISA for VEGF), and alteration in gene expression [VEGF, stromal derived factor-1α (SDF-1α), HGF, bFGF, Bcl2, and Caspase-3]. DZ preconditioned DM-EPCs demonstrated significantly increased survival and VEGF release while reduced cell injury and senescence. Furthermore, DZ preconditioned DM-EPCs exhibited up-regulated expression of prosurvival genes (VEGF, SDF-1α, HGF, bFGF, and Bcl2) on exposure to H2O2, and VEGF and Bcl2 on exposure to hyperglycemia while down regulation of Caspase-3 gene. Eight weeks after type 1 diabetes induction, DZ preconditioned, and non-preconditioned DM-EPCs were transplanted into left ventricle of diabetic rats (at a dose of 2 × 10(6) DM-EPCs/70 μl serum free medium). After 4 weeks, DZ preconditioned DM-EPCs transplantation improved cardiac function as assessed by Millar's apparatus. There was decrease in collagen content estimated by Masson's trichrome and sirius red staining. Furthermore, reduced cell injury was observed as evidenced by decreased expression of Caspase-3 and increased expression of prosurvival genes Bcl2, VEGF, and bFGF by semi-quantitative real-time PCR. In conclusion, the present study demonstrated that DZ preconditioning enhanced EPCs survival under oxidative and hyperglycemic stress and their ability to treat DCM.