Decreased heat shock protein (Hsp) expression in type 1 and type 2 diabetes has been implicated as a primary factor contributing to diabetes-induced organ damage. We recently showed that diabetic cardiomyocytes could release detrimental exosomes, which contain lower levels of Hsp20 than normal ones. To investigate whether such detrimental exosomes could be modified in cardiomyocytes by raising Hsp20 levels to become protective, we used a transgenic (TG) mouse model with cardiac-specific overexpression of Hsp20. TG and control wild-type (WT) mice were injected with streptozotocin (STZ) to induce diabetes. We observed that overexpression of Hsp20 significantly attenuated STZ-caused cardiac dysfunction, hypertrophy, apoptosis, fibrosis, and microvascular rarefaction. Moreover, Hsp20-TG cardiomyocytes exhibited an increased generation/secretion of exosomes by direct interaction of Hsp20 with Tsg101. Of importance, exosomes derived from TG cardiomyocytes encased higher levels of Hsp20, p-Akt, survivin, and SOD1 than WT exosomes and protected against in vitro hyperglycemia-triggered cell death, as well as in vivo STZ-induced cardiac adverse remodeling. Last, blockade of exosome generation by GW4869 remarkably offset Hsp20-mediated cardioprotection in diabetic mice. Our results indicate that elevation of Hsp20 in cardiomyocytes can offer protection in diabetic hearts through the release of instrumental exosomes. Thus, Hsp20-engineered exosomes might be a novel therapeutic agent for diabetic cardiomyopathy.