Diabetes is a major cause of mortality and morbidity due to the long term microvascular complications of this disease. There is now convincing evidence to show that genetic factors together with elevated blood glucose play an important role in the susceptibility to diabetic nephropathy as well as retinopathy. The polyol pathway is thought to play an important role in the pathogenesis of diabetic microvascular complications. Aldose reductase is the first and rate-limiting enzyme of the polyol pathway. Polymorphisms in the promoter region as well as elsewhere in the gene have been associated with susceptibility to nephropathy, retinopathy as well as diabetic neuropathy. These associations have been replicated in patients with either type 1 or type 2 diabetes mellitus as well as across ethnic groups. These polymorphisms in the promoter region are also associated with expression of the gene. Although clinical trials using inhibitors of aldose reductase to treat diabetic microvascular complications have largely been unsuccessful, the identification of the susceptibility genes may help in the design of future drug regimens.