Reduced levels of adiponectin (APN) contribute to cardiovascular injury in the diabetic population. Recent studies demonstrate elevated circulating APN levels are associated with endothelial dysfunction during pre-diabetes, suggesting the development of APN resistance. However, mechanisms leading to, and the role of, vascular APN resistance in endothelial dysfunction remain unidentified. The current study determined whether diabetes cause endothelial APN resistance, and by what mechanisms. Under high glucose/high lipids (HG/HL), APN-stimulated nitric oxide production by HUVEC was decreased, phosphorylation of eNOS, AMPK, and Akt was attenuated (P<0.01), and APN's anti-TNFα effect was blunted (P<0.01). APN receptor expression remained normal, whereas Cav1 expression was reduced in HG/HL cells (P<0.01). The AdipoR1/Cav1 signaling complex was dissociated in HG/HL cells. Knock-down of Cav1 inhibited APN's anti-oxidative and anti-inflammatory actions. Conversely, preventing HG/HL-induced Cav1 downregulation by Cav1 overexpression preserved APN signaling in HG/HL cells. Knock-in of a wild type Cav1 in Cav1 knock-down cells restored caveolae structure and rescued APN signaling. In contrast, knock-in of a mutated Cav1 scaffolding domain restored caveolae structure, but failed to rescue APN signaling in Cav1 knock-down cells. Finally, AdipoR1/Cav1 interaction was significantly reduced in diabetic vascular tissue, and the vasorelaxative response to APN was impaired in diabetic animals. The current study demonstrates for the first time the interaction between AdipoR1 and Cav1 is critical for adiponectin-mediated vascular signaling. The AdipoR1/Cav1 interaction is adversely affected by HG/HL, due largely to reduced Cav1 expression, supporting a potential mechanism for the development of APN resistance, contributing to diabetic endothelial dysfunction.