Impaired angiogenesis in ischemic tissue is a hallmark of diabetes. Thioredoxin-interacting protein (TXNIP) is an exquisitely glucose-sensitive gene that is overexpressed in diabetes. As 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 (EC) function and survival by reducing VEGF production and sensitivity to VEGF action, findings that are rescued by silencing TXNIP with small interfering RNA. High glucose–induced EC 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 nondiabetic 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 nondiabetic 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.