Increased intracellular reactive oxygen species (ROS) contribute to vascular disease and pro-atherosclerotic effects of diabetes mellitus may be mediated by oxidative stress. Several ROS-scavenging systems tightly control cellular redox balance; however, their role in hyperglycemia-induced oxidative stress is unclear. A ubiquitous antioxidative mechanism for regulating cellular redox balance is thioredoxin, a highly conserved thiol reductase that interacts with an endogenous inhibitor, thioredoxin-interacting protein (Txnip). Here we show that hyperglycemia inhibits thioredoxin ROS-scavenging function through p38 MAPK-mediated induction of Txnip. Overexpression of Txnip increased oxidative stress, while Txnip gene silencing restored thioredoxin activity in hyperglycemia. Diabetic animals exhibited increased vascular expression of Txnip and reduced thioredoxin activity, which normalized with insulin treatment. These results provide evidence for the impairment of a major ROS-scavenging system in hyperglycemia. These studies implicate reduced thioredoxin activity through interaction with Txnip as an important mechanism for vascular oxidative stress in diabetes mellitus.