An elevated urinary albumin excretion is associated with an increased risk of cardiovascular disease due to atherosclerosis, but the pathophysiological mechanism underlying this association is poorly understood. We studied 217 diabetic patients, that is, 121 normoalbuminuric patients, 71 microalbuminuric patients, and 25 macroalbuminuric patients. We evaluated flow-mediated dilatation of brachial artery (%FMD, one endothelial function marker associated with endogenous NO production), von Willebrand factor (vWF, endothelial activation marker), high-sensitive CRP (hsCRP, a low-grade inflammation marker), asymmetric dimethyl arginine (ADMA, an endogenous inhibitor of NO synthesis), and insulin sensitivity by steady-state plasma glucose method. %FMD was apparently decreased in microalbuminuric and macroalbuminuric patients compared with normoalbuminuric patients (p<0.001). Moreover, %FMD was significantly correlated with the degree of albuminuria (r=-0.38, p<0.05). On the other hand, vWF and hsCRP did not show significant difference between normoalbuminuric patients and microalbuminuric patients. In diabetic patients with macroalbuminuria, ADMA was significantly elevated compared to those with normoalbuminuria. Insulin sensitivity was significantly associated with urinary albumin excretion rate. These results suggested that endothelial dysfunction which may be due to impaired NO production and insulin resistance underlie the association between diabetic nephropathy and atherosclerosis in diabetic patients.