Impaired angiogenesis in ischemic tissue is a hallmark of diabetes mellitus. Thioredoxin interacting protein (TXNIP) is an exquisitely glucose-sensitive gene that is overexpressed in diabetes. Since TXNIP modulates the activity of the key angiogenic cytokine vascular endothelial growth factor (VEGF), we hypothesized that hyperglycemia-induced dysregulation of TXNIP may play a role in the pathogenesis of impaired angiogenesis in diabetes. In the current study, we report that high glucose-mediated overexpression of TXNIP induces a widespread impairment in endothelial cell function and survival by reducing VEGF production and sensitivity to VEGF action, findings which are rescued by silencing TXNIP with siRNA. High glucose-induced endothelial cell dysfunction was recapitulated in normal glucose conditions by overexpressing either TXNIP or a TXNIP C247S mutant unable to bind thioredoxin, suggesting that TXNIP effects are largely independent of thioredoxin activity. In streptozotocin-induced diabetic mice, TXNIP knockdown to non-diabetic levels rescued diabetes-related impairment of angiogenesis, arteriogenesis, blood flow and functional recovery in an ischemic hindlimb. These findings were associated with in vivo restoration of VEGF production to non-diabetic levels. These data implicate a critical role for TXNIP in diabetes-related impairment of ischemia-mediated angiogenesis and identify TXNIP as a potential therapeutic target for the vascular complications of diabetes mellitus.