Diabetes is a major predictor of in-stent restenosis, which is associated with fibroproliferative remodeling of the vascular wall due to increased transforming growth factor-β (TGF-β) action. It is well established that thrombospondin1 (TSP1) is a major regulator of TGF-β activation in renal and cardiac complications of diabetes. However, the role of the TSP1-TGF-β pathway in macrovascular diabetic complications, including restenosis, has not been addressed. In mesangial cells, high glucose concentrations depress protein kinase G (PKG) activity, but not PKG-I protein, thereby downregulating transcriptional repression of TSP1. Previously, we showed that high glucose downregulates PKG-I protein expression by vascular smooth muscle cells (VSMCs) through altered NADPH oxidase signaling. In the present study, we investigated whether high glucose regulation of PKG protein and activity in VSMCs similarly regulates TSP1 expression and downstream TGF-β activity. These studies showed that high glucose stimulates both TSP1 expression and TGF-β bioactivity in primary murine aortic smooth muscle cells (VSMCs). TSP1 is responsible for the increased TGF-β bioactivity under high glucose conditions, because treatment with anti-TSP1 antibody, small interfering RNA-TSP1, or an inhibitory peptide blocked glucose-mediated increases in TGF-β activity and extracellular matrix protein (fibronectin) expression. Overexpression of constitutively active PKG, but not the PKG-I protein, inhibited glucose-induced TSP1 expression and TGF-β bioactivity, suggesting that PKG protein expression is insufficient to regulate TSP1 expression. Together, these data establish that glucose-mediated downregulation of PKG levels stimulates TSP1 expression and enhances TGF-β activity and matrix protein expression, which can contribute to vascular remodeling in diabetes.