Diabetes is characterized by a chronic stage of hyperglycemia associated with endothelial progenitor cell dysfunction and reduced neovascularization in response to tissue ischemia. The underlying mechanisms are not entirely clear. The bone marrow niches provide the essential microenvironment for maintenance of stem cell function in the bone marrow. A disturbed stem cell niche might lead to stem cell dysfunction, thereby, impairing progenitor cell-dependent vascular repair. Therefore, we investigated the effects of streptozotocin-induced diabetes on the bone marrow stem cell niches and stem cell function in mice. Here, we show that long-term diabetes induced a reduction in Lin⁻Sca-1⁺c-kit⁺ hematopoietic progenitor cells and reduced the repopulation capacity in a competitive engraftment experiment. Consistently, the expression of Bmi1, which prevents hematopoietic progenitor cell senescence, was significantly reduced in diabetic bone marrow cells. To address the mechanism underlying the progenitor cell dysfunction, we analyzed the composition of the stem cell niche and the cytokine environment. Although the morphology of the vascular and endosteal niche was not affected by diabetes, diabetic mice showed a significant deterioration of cytokine expression patterns in the bone marrow. In summary, these data indicate that diabetes imposes a long-term effect on the stem cell niche and affects important hematopoietic progenitor cell functions in mice.