Diabetes mellitus is one of the major risk factors for cardiovascular disease and is an important health issue worldwide. Long-term diabetes causes endothelial dysfunction, which in turn leads to diabetic vascular complications. Endothelium-derived nitric oxide is a major vasodilator in large-size vessels, and the hyperpolarization of vascular smooth muscle cells mediated by the endothelium plays a central role in agonist-mediated and flow-mediated vasodilation in resistance-size vessels. Although the mechanisms underlying diabetic vascular complications are multifactorial and complex, impairment of endothelium-dependent hyperpolarization (EDH) of vascular smooth muscle cells would contribute at least partly to the initiation and progression of microvascular complications of diabetes. In this review, we present the current knowledge about the pathophysiology and underlying mechanisms of impaired EDH in diabetes in animals and humans. We also discuss potential therapeutic approaches aimed at the prevention and restoration of EDH in diabetes.