Tissue ischemia promotes vasculogenesis through chemokine-induced recruitment of bone marrow-derived endothelial progenitor cells (EPCs). Diabetes significantly impairs this process. Because hyperglycemia increases reactive oxygen species in a number of cell types, and because many of the defects responsible for impaired vasculogenesis involve HIF1-regulated genes, we hypothesized that HIF1 function is impaired in diabetes because of reactive oxygen species-induced modification of HIF1alpha by the glyoxalase 1 (GLO1) substrate methylglyoxal. Decreasing superoxide in diabetic mice by either transgenic expression of manganese superoxide dismutase or by administration of an superoxide dismutase mimetic corrected post-ischemic defects in neovascularization, oxygen delivery, and chemokine expression, and normalized tissue survival. In hypoxic fibroblasts cultured in high glucose, overexpression of GLO1 prevented reduced expression of both the EPC mobilizing chemokine stromal cell-derived factor-1 (SDF-1) and of vascular epidermal growth factor, which modulates growth and differentiation of recruited EPCs. In hypoxic EPCs cultured in high glucose, overexpression of GLO1 prevented reduced expression of both the SDF-1 receptor CXCR4, and endothelial nitric-oxide synthase, an enzyme essential for EPC mobilization. HIF1alpha modification by methylglyoxal reduced heterodimer formation and HIF1alpha binding to all relevant promoters. These results provide a basis for the rational design of new therapeutics to normalize impaired ischemia-induced vasculogenesis in patients with diabetes.