Despite abundant clinical evidence linking metabolic abnormalities to diabetic vasculopathy, the molecular basis of individual susceptibility to diabetic vascular complications is still largely undetermined. Endothelial dysfunction in diabetes-associated vascular complications is considered an early stage of vasculopathy and has attracted considerable research interests. Type 2 diabetes is characterized by metabolic abnormalities, such as hyperglycemia, excess liberation of free fatty acids (FFA), insulin resistance and hyperinsulinemia. These abnormalities exert pathological impact on endothelial function by attenuating endothelium-mediated vasomotor function, enhancing endothelial apoptosis, stimulating endothelium activation/endothelium–monocyte adhesion, promoting an atherogenic response and suppressing barrier function. There are multiple signaling pathways contributing to the adverse effects of glucotoxicity on endothelial function. Insulin maintains the normal balance for release of several factors with vasoactive properties. Abnormal insulin signaling in the endothelium does not affect the whole-body glucose metabolism, but impairs endothelial response to insulin and accelerates atherosclerosis. Excessive level of FFA is implicated in the pathogenesis of insulin resistance. FFA induces endothelial oxidative stress, apoptosis and inflammatory response, and inhibits insulin signaling. Although hyperglycemia, insulin resistance, hyperinsulinemia and dyslipidemia independently contribute to endothelial dysfunction via various distinct mechanisms, the mutual interactions may synergistically accelerate their adverse effects. Oxidative stress and inflammation are predicted to be among the first alterations which may trigger other downstream mediators in diabetes associated with endothelial dysfunction. These mechanisms may provide insights into potential therapeutic targets that can delay or reverse diabetic vasculopathy.