Increased capillary permeability to large molecular weight plasma proteins is an early phenomenon in diabetes that affects the microvasculature of the kidney, eye, brain, and many other peripheral tissues such as skin and muscle. This widespread vascular leakiness is related to the metabolic disturbance of diabetes and associated changes in blood flow and intravascular pressure. Correction of hyperglycemia and increased blood flow reduces and often normalizes the excessive leakage. The relevance of increased small vessel permeability to eventual organ and tissue damage remains largely speculative. However, recent experimental evidence has suggested that certain levels of subclinical elevated urinary albumin excretion rate strongly predict the onset of Albustix-positive proteinuria, a certain precursor of renal failure. Hemodynamic factors in the genesis of diabetic microangiopathy are discussed, and a hypothetic sequence of events leading from increased capillary permeability to end stage organ or tissue failure is suggested.