Diabetes leads to a decompensated myopathy, but the etiology of the cardiac disease is poorly understood. Oxidative stress is enhanced with diabetes and oxygen toxicity may alter cardiac progenitor cell (CPC) function resulting in defects in CPC growth and myocyte formation, which may favor premature myocardial aging and heart failure. We report that in a model of insulin-dependent diabetes mellitus, the generation of reactive oxygen species (ROS) leads to telomeric shortening, expression of the senescent associated proteins p53 and p16^INK4a, and apoptosis of CPCs, impairing the growth reserve of the heart. However, ablation of the p66^shc gene prevents these negative adaptations of the CPC compartment, interfering with the acquisition of the heart senescent phenotype and the development of heart failure with diabetes. ROS elicit 3 cellular reactions: low levels activate cell growth, intermediate quantities trigger cell apoptosis, and high amounts initiate cell necrosis. CPC replication predominates in diabetic p66^shc−/−, whereas CPC apoptosis and myocyte apoptosis and necrosis prevail in diabetic wild type. Expansion of CPCs and developing myocytes preserves cardiac function in diabetic p66^shc−/−, suggesting that intact CPCs can effectively counteract the impact of uncontrolled diabetes on the heart. The recognition that p66^shc conditions the destiny of CPCs raises the possibility that diabetic cardiomyopathy is a stem cell disease in which abnormalities in CPCs define the life and death of the heart. Together, these data point to a genetic link between diabetes and ROS, on the one hand, and CPC survival and growth, on the other.