In both type 1 and type 2 diabetes, diabetic complications in target organs arise from chronic elevations of glucose. The pathogenic effect of high glucose, possibly in concert with fatty acids, is mediated to a significant extent via increased production of reactive oxygen species (ROS) and reactive nitrogen species (RNS) and subsequent oxidative stress. ROS and RNS directly oxidize and damage DNA, proteins, and lipids. In addition to their ability to directly inflict damage on macromolecules, ROS and RNS indirectly induce damage to tissues by activating a number of cellular stress-sensitive pathways. These pathways include nuclear factor-κB, p38 mitogen-activated protein kinase, NH₂-terminal Jun kinases/stress-activated protein kinases, hexosamines, and others. In addition, there is evidence that in type 2 diabetes, the activation of these same pathways by elevations in glucose and free fatty acid (FFA) levels leads to both insulin resistance and impaired insulin secretion. Therefore, we propose here that the hyperglycemia-induced, and possibly FFA-induced, activation of stress pathways plays a key role in the development of not only the late complications in type 1 and type 2 diabetes, but also the insulin resistance and impaired insulin secretion seen in type 2 diabetes.