Hypertension is a common comorbidity of type 2 diabetes mellitus (T2DM). Both conditions are associated with an increased cardiovascular risk, which is reduced by tight blood pressure (BP) and glycemic control. However, nondipping BP status continues to be an enduring cardiovascular risk factor in T2DM. Cardiovascular autonomic neuropathy and endothelial dysfunction have been proposed as potential mechanisms. This study tested the hypothesis that microvascular disease rather than cardiovascular autonomic neuropathy interferes with the physiological nocturnal BP reduction. Cardiovascular autonomic function and baroreflex sensitivity were determined in 22 type 2 diabetic patients with (DM+) and 23 diabetic patients without (DM−) manifest microvascular disease. BP dipping status was assessed from 24-hour ambulatory BP measurements. Sixteen nondiabetic subjects served as controls (CTRL). Cardiovascular autonomic function was normal in all subjects. Baroreflex sensitivity was lower in DM− compared with CTRL (7.7 ± 3.3 vs. 12.3 ± 8.3 ms·mm Hg−1; P < 0.05) and was further reduced in DM + (4.6 ± 2.0 ms·mm Hg−1; P < 0.01 vs. DM− and CTRL). The nocturnal decline in systolic and diastolic BP was blunted in DM− (12% and 14% vs. 17% and 19% in CTRL; P < 0.05) and even more so in DM+ (8% and 11%; P < 0.05 vs. DM− and P < 0.001 vs. CTRL). A nocturnal reduction in pulse pressure was observed in CTRL and DM− but not in DM+ (P < 0.05 vs. DM− and P < 0.01 vs. CTRL). In T2DM, progression of microvascular disease interferes with the normal nocturnal BP decline and coincides with a persistently increased pulse pressure and reduced baroreflex sensitivity, contributing to their increased cardiovascular risk.