Endothelial dysfunction is the earliest pathologic alteration in diabetic vascular injury and plays a critical role in the development of atherosclerosis. Plasma levels of adiponectin (APN), a novel vasculoprotective adipocytokine, are significantly reduced in diabetic patients, but its relationship with endothelial dysfunction remains unclear. The present study aims to determine whether APN deficiency may cause endothelial dysfunction and to investigate the involved mechanisms. Vascular rings were made from the aortic vessels of wild type (WT) or APN knockout (APN^−/−) mice. Endothelial function, total NO production, eNOS expression/phosphorylation, superoxide production, and peroxynitrite formation were determined. ACh and acidified NaNO₂ (endothelial dependent and independent vasodilators, respectively) caused similar concentration-dependent vasorelaxation in WT vascular rings. APN^−/− rings had a normal response to acidified NaNO₂, but a markedly reduced response to ACh (>50% reduction vs. WT, P<0.01). Both superoxide and peroxynitrite production were increased in APN^−/− vessels (P<0.01 vs. WT). Pretreatment with superoxide scavenger Tiron significantly, but incompletely restored vascular vasodilatory response to ACh. In APN^−/− vessels, eNOS expression was normal, but NO production and eNOS phosphorylation was significantly reduced (P<0.01 vs. WT). Treatment of APN^−/− mice in vivo with the globular domain of adiponectin reduced aortic superoxide production, increased eNOS phosphorylation, and normalized vasodilatory response to ACh. Increased NO inactivation combined with decreased basal NO production contributes to endothelial dysfunction development when there is a paucity of APN production. Interventions directed towards increasing plasma APN levels may improve endothelial function, and reduce cardiovascular complications suffered by diabetic patients.