Endothelial progenitor cell (EPC) dysfunction contributes to diabetes‐induced delay in endothelium repair after vessel injury, prominently associated with diabetic cardiovascular complications such as neointima formation. ATP‐binding cassette transporter G1 (ABCG1) promotes cholesterol efflux to HDL, which may favorably affect EPC function. However, whether ABCG1 improves EPC function, especially in diabetes, remains unknown. Here we investigated the role of ABCG1 in EPCs by using Tie2‐mediated ABCG1 transgenic (Tie2‐ABCG1^Tg)mice. Mice were injected with streptozotocin to induce diabetes mellitus. As compared with wild‐type (WT) mice, in Tie2‐ABCG1^Tg mice, diabetes‐impaired EPC migration and tube formation were reversed. In vitro gain‐of‐function and loss‐of‐function studies further revealed that ABCG1‐overexpressing EPCs showed increased migration and tube formation and differentiation via the Lck/Yes‐related novel protein tyrosine kinase /Akt/endothelial NO synthase pathway by enhancing cellular cholesterol efflux. Finally, type 1 and type 2 diabetic mouse models with arterial injury were intravenously injected with labeled EPCs from WT or Tie2‐ABCG1^Tg mice. Re‐endothelialization in diabetic mice was improved to a greater extent by injection of ABCG1‐overexpressing than WT EPCs. Our study demonstrated that ABCG1 in EPCs improved repair after vascular injury in diabetes by increasing EPC function such as migration, tube formation and differentiation, and subsequent re‐endothelialization. ABCG1 might be a promising therapeutic target for diabetes‐associated vascular diseases.—Shi, Y., Lv, X., Liu, Y., Li, B., Liu, M., Yan, M., Liu, Y., Li, Q., Zhang, X., He, S., Zhu, M., He, J., Zhu, Y., Zhu, Y., Ai, D. Elevating ATP‐binding cassette transporter G1 improves re‐endothelialization function of endothelial progenitor cells via Lyn/Akt/eNOS in diabetic mice. FASEB J. 32, 6525–6536 (2018). www.fasebj.org