Patients with diabetes mellitus tend to develop ischemia-related complications and have compromised endothelial progenitor cell (EPC) function. Melatonin protects against ischemic injury, possibly via EPC modulation. We investigated whether melatonin pretreatment could restore EPC function impairment and improve circulation recovery in a diabetic critical limb ischemia mouse model. Under 25 mM high-glucose medium in vitro, EPC proliferation, nitric oxide production, tube formation, and endothelial nitric oxide synthase (eNOS) phosphorylation were significantly suppressed. Hyperglycemia promoted EPC senescence and apoptosis as well as increased reactive oxygen species (ROS) production. Melatonin treatment reversed the harmful effects of hyperglycemia on EPC through adenosine monophosphate–activated protein kinase-related mechanisms to increase eNOS phosphorylation and heme oxygenase-1 expression. In an in-vivo study, after a 4-week surgical induction of hindlimb ischemia, mice with streptozotocin (STZ)-induced diabetes showed significant reductions in new vessel formation, tissue reperfusion, and EPC mobilization in ischemic hindlimbs compared to non-diabetic mice. Mice with STZ-induced diabetes that received melatonin treatment (10 mg/kg/day, intraperitoneal) had significantly improved blood perfusion ratios of ischemic to non-ischemic limb, EPC mobilization, and densities of capillaries. In addition, a murine bone marrow transplantation model to support these findings demonstrated that melatonin stimulated bone marrow-originated EPCs to differentiate into vascular endothelial cells in femoral ligation-induced ischemic muscles. In summary, this study suggests that melatonin treatment augments EPC function along with neovascularization in response to ischemia in diabetic mice. We illustrated the protective effects of melatonin on EPC H2O2 production, senescence, and migration through melatonin receptors and modulating eNOS, AMPK, and HO-1 activities at the cellular level. Thus, melatonin might be used to treat the impairment of EPC mobilization and circulation recuperation in response to ischemic injury caused by chronic hyperglycemia. Additional studies are needed to elucidate the applicability of the results in humans.