Heart failure and related morbidity and mortality are increasing at an alarming rate, in large part, because of increases in aging, obesity, and diabetes mellitus. The clinical outcomes associated with heart failure are considerably worse for patients with diabetes mellitus than for those without diabetes mellitus. In people with diabetes mellitus, the presence of myocardial dysfunction in the absence of overt clinical coronary artery disease, valvular disease, and other conventional cardiovascular risk factors, such as hypertension and dyslipidemia, has led to the descriptive terminology, diabetic cardiomyopathy. The prevalence of diabetic cardiomyopathy is increasing in parallel with the increase in diabetes mellitus. Diabetic cardiomyopathy is initially characterized by myocardial fibrosis, dysfunctional remodeling, and associated diastolic dysfunction, later by systolic dysfunction, and eventually by clinical heart failure. Impaired cardiac insulin metabolic signaling, mitochondrial dysfunction, increases in oxidative stress, reduced nitric oxide bioavailability, elevations in advanced glycation end products and collagen-based cardiomyocyte and extracellular matrix stiffness, impaired mitochondrial and cardiomyocyte calcium handling, inflammation, renin–angiotensin–aldosterone system activation, cardiac autonomic neuropathy, endoplasmic reticulum stress, microvascular dysfunction, and a myriad of cardiac metabolic abnormalities have all been implicated in the development and progression of diabetic cardiomyopathy. Molecular mechanisms linked to the underlying pathophysiological changes include abnormalities in AMP-activated protein kinase, peroxisome proliferator-activated receptors, O-linked N-acetylglucosamine, protein kinase C, microRNA, and exosome pathways. The aim of this review is to provide a contemporary view of these instigators of diabetic cardiomyopathy, as well as mechanistically based strategies for the prevention and treatment of diabetic cardiomyopathy.