The global pandemic of diabetes mellitus portends an alarming rise in the prevalence of microvascular complications, despite advanced therapies for hyperglycemia, hypertension and dyslipidemia. Peroxisome proliferator-activated receptor α (PPARα) is expressed in organs affected by diabetic microvascular disease (retina, kidney and nerves), and its expression is regulated specifically in these tissues. Experimental evidence suggests that PPARα activation attenuates or inhibits several mediators of vascular damage, including lipotoxicity, inflammation, reactive oxygen species generation, endothelial dysfunction, angiogenesis and thrombosis, and thus might influence intracellular signaling pathways that lead to microvascular complications. PPARα has emerged as a novel target to prevent microvascular disease, via both its lipid-related and lipid-unrelated actions. Despite strong experimental evidence of the potential benefits of PPARα agonists in the prevention of vascular damage, the evidence from clinical studies in patients with diabetes mellitus remains limited. Promising findings from the Fenofibrate Intervention and Event Lowering in Diabetes (FIELD) study on microvascular outcomes are countered by elevations in participants' homocysteine and creatinine levels that might potentially attenuate the benefits of PPARα activation. This Review focuses on the role of PPARα activation in diabetic microvascular disease and highlights the available experimental and clinical evidence from studies of PPARα agonists.