Decreased levels of circulating endothelial progenitor cells (EPCs) predict increased risk of cardiovascular events in diabetic patients. Insulin treatment exerts important cardiovascular protection. Whether and how insulin participates in the EPC regulation of postnatal neovascularization are currently unclear. We employed a mouse hindlimb ischemia model to study EPC mobilization in non-diabetic and streptozotocin-induced diabetic mice. Insulin was administered to diabetic animals postoperatively. To determine the role of EPCs contributing to postnatal vasculogenesis, we used bone marrow-transplanted mice whose bone marrow cells selectively expressed enhanced green fluorescent protein (EGFP). Insulin treatment improved EPC mobilization into peripheral blood, accelerated transcutaneous oxygen pressure restoration and increased capillary density in the ischemic limb associated with partial incorporation of EGFP-positive cells into the capillaries. Insulin treatment restored ischemia-induced release of stromal-derived growth factor 1α and vascular endothelial growth factor (VEGF), and consequently enhanced the activity of Akt and endothelial nitric oxide synthase (eNOS) as well as matrix metalloproteinase-9 in bone marrow. Insulin also augmented tissue-level activation of VEGF/Akt/eNOS pathway. However, all such effects of insulin were completely blocked by combined treatment with a NOS inhibitor. Our data suggested that insulin treatment improved ischemia-induced EPC mobilization and contributed to compensatory neovascularization in diabetic mice through a VEGF/eNOS-related pathway.