Atrial natriuretic peptide (ANP) is a vasodilator with significant regional differences and controversial effects in the cerebral circulation, a vascular bed particularly prone to diabetes-induced complications. The present study has investigated how alloxan-induced diabetes modifies the mechanisms involved in the response of the rabbit basilar artery to ANP. ANP (10–12–10−7 M) relaxed precontracted basilar arteries, with higher potency in diabetic than in control rabbits. In arteries from both groups of animals, endothelium removal reduced ANP-induced relaxations. Inhibition of NO-synthesis attenuated ANP-induced relaxation but this attenuation was lower in diabetic than in control rabbits. In control rabbits, indomethacin displaced to the left the concentration-response curve to ANP, without significantly modifying the Emax value. In diabetic rabbits, indomethacin significantly enhanced arterial relaxations to ANP. In KCl-depolarised arteries, relaxation to ANP was almost abolished both in control and in diabetic rabbits. Iberiotoxin inhibited relaxations to ANP in both groups of rabbits. Glibenclamide and 4-aminopyridine inhibited the ANP-induced relaxations more in diabetic than in control rabbits. Basilar arteries from diabetic rabbits showed decreased natriuretic peptide receptor C expression and no changes in natriuretic peptide receptor A, large conductance calcium-activated K+ channels (BKCa), ATP-sensitive K+ channels (KATP) and voltage-sensitive K+ channels (KV) expression. These results suggest that diabetes enhances the sensitivity of the rabbit basilar artery to ANP by mechanisms that at least include reduced expression of natriuretic peptide receptor C, and enhanced activity of KATP and KV channels. Furthermore, diabetes reduces endothelial NO and prostacyclin which mediate arterial relaxation to ANP.