Vascular dysfunction is important in the pathogenesis of peripheral complications of diabetes. However, the effects of diabetes on cerebral blood flow and the role of vascular deficits in the pathogenesis of diabetic encephalopathy are still unknown. The present study examined whether experimental diabetes is associated with reduced cerebral blood flow and whether treatment with enalapril can improve cerebral perfusion and function (blood flow and functional cerebral deficits). Streptozotocin-diabetic rats were treated with the ACE inhibitor enalapril (24 mg/kg) from onset of diabetes. After 14 weeks of diabetes, 12 enalapril treated and 12 untreated diabetic rats, and 12 nondiabetic age-matched control rats were tested in a spatial version of the Morris water maze. After 16 weeks of diabetes, in the same groups, blood flow in the hippocampus and thalamus was measured by hydrogen clearance microelectrode polarography. In a separate study, hippocampal long-term potentiation was measured after 26 weeks of diabetes. Water maze performance and hippocampal long-term potentiation were impaired in diabetic rats. Furthermore, blood flow in diabetic rats was reduced by 30% (P<0.001) in the hippocampus and by 37% (P<0.005) in the thalamus compared to nondiabetic controls. Enalapril treatment significantly improved water maze performance (P<0.05), hippocampal long term potentiation (P<0.05) and hippocampal blood flow (P<0.05). Cerebral perfusion is reduced in diabetic rats compared to controls. Treatment aimed at the vasculature can improve cerebral blood flow, deficits in Morris maze performance and long term potentiation. These findings suggest that vasculopathy plays a role in the development of cerebral dysfunction in diabetic rats.