Previous studies indicate that endothelial nitric oxide synthase (eNOS) function is impaired in diabetes as a result of increased vascular generation of reactive oxygen species. We hypothesized that eNOS gene therapy would augment NO· bioavailability and protect against hepatic ischemia-reperfusion (I-R) injury in type 2 diabetes mellitus. We developed a transgenic (Tg) diabetic mouse in which eNOS is systemically overexpressed. We also examined the effects of hepatic eNOS adenovirus therapy in diabetic mice. Diabetic (db/db) and nondiabetic mice were subjected to hepatic I-R injury. In nondiabetic mice, genetic overexpression of eNOS (both eNOS-Tg and eNOS adenovirus) resulted in hepatoprotection. In contrast, hepatic I-R injury was significantly increased in the db/db eNOS-Tg mouse, as serum alanine aminotransaminase (ALT) levels were increased by 3.3-fold compared with diabetic controls. Similarly, eNOS adenovirus treatment resulted in a 3.2-fold increase in serum ALT levels as compared with diabetic controls. We determined that hepatic eNOS was dysfunctional in the db/db mouse and increased genetic expression of eNOS resulted in greater production of peroxynitrite. Treatment with the eNOS cofactor tetrahydrobiopterin (BH₄) or the BH₄ precursor sepiapterin resulted in a significant decrease in serum ALT levels following I-R injury. We present clear examples of the protective and injurious nature of NO· therapy in I-R. Our data indicate that eNOS exists in an “uncoupled” state in the setting of diabetes and that “recoupling” of the eNOS enzyme with cofactor therapy is beneficial.