The discovery of endothelial progenitor cell (EPC) a decade ago has refuted the previous belief that vasculogenesis only occurs during embryogenesis. The reduced circulating concentration of EPCs is a surrogate marker of endothelial function and has been implicated in the pathogenesis of many vascular diseases. To date, the therapeutic benefit of neovascularization in ischaemic conditions in a non-diabetic setting has been demonstrated. This article aims to review the biology of EPCs in the diabetic setting with special emphasis on the effects of cardiovascular risk factor modification on EPC phenotype and methods to reverse or augment EPC dysfunction. The potential of the use of EPCs in the treatment of the diabetic vascular dysfunction will also be discussed.