Endoplasmic reticulum (ER) stress attributes a crucial role in diabetes-induced endothelial dysfunction. The present study investigated the effects of quercetin, a potent antioxidant on the attenuation of ER stress-modulated endothelial dysfunction in streptozotocin (STZ)-induced diabetic rats. Oral administration of quercetin for six weeks to diabetic rats dose-dependently reduced the blood glucose levels and improved insulin secretion. Histopathological examination of pancreatic tissues in diabetic rats showed pathological changes such as shrunken islets, reduction in islet area and distorted β-cells, which were found to be restored by quercetin treatment. In addition, quercetin reduced the pancreatic ER stress-induced endothelial dysfunction as assessed by immunohistochemical analysis of C/ERB homologous protein (CHOP) and endothelin-1 (ET-1). Moreover, quercetin administration progressively increased the expression of vascular endothelial growth factor (VEGF) and its receptor, VEGFR2 in diabetes rats. Quercetin-mediated decrease in the nitric oxide (NO·) and cyclic 3′,5′- guanosine monophosphate (cGMP) levels were also observed in the diabetic rats. Quercetin treatment reduced the lipid peroxidation in the diabetic rats, meanwhile increased the total antioxidant capacity in the pancreas from diabetic rats. Altogether, these results demonstrated the vasoprotective effect of quercetin against STZ-induced ER stress in the pancreas of diabetic rats.