Vasodilation and increased blood flow are characteristic early vascular responses to acute hyperglycemia and tissue hypoxia. In hypoxic tissues these vascular changes are linked to metabolic imbalances associated with impaired oxidation of NADH to NAD+ and the resulting increased ratio of NADH/NAD+. In hyperglycemic tissues these vascular changes also are linked to an increased ratio of NADH/NAD+, in this case because of an increased rate of reduction of NAD+ to NADH. Several lines of evidence support the likelihood that the increased cytosolic ratio of free NADH/NAD+ caused by hyperglycemia, referred to as pseudohypoxia because tissue partial pressure oxygen is normal, is a characteristic feature of poorly controlled diabetes that mimics the effects of true hypoxia on vascular and neural function and plays an important role in the pathogenesis of diabetic complications. These effects of hypoxia and hyperglycemia-induced pseudohypoxia on vascular and neural function are mediated by a branching cascade of imbalances in lipid metabolism, increased production of superoxide anion, and possibly increased nitric oxide formation.