The risk of cardiovascular disease (CVD) and mortality in type-2 diabetic patients is twice as high as in age-matched healthy subjects. However, the mechanisms linking type-2 diabetes with CVD remain poorly understood. We studied changes in ECC and mitochondrial function in control and diabetic (db/db) mice. We found no major changes in ECC (Ca transients, cell shortening, sarcoplasmic reticulum Ca2+ load) under basal conditions despite decreased heart-to-body weight. However, under stress conditions (beta-adrenergic stimulation) ECC was significantly impaired, and increased ROS generation and a shift of the redox environment towards oxidation were observed. Furthermore mitochondrial Ca2+ uptake was increased leading to enhanced mPTP opening. Mitochondrial respiration monitored using the Seahorse extracellular flux analyzer was decreased in diabetic hearts. We determined that despite elevated blood glucose levels (395 vs 157 mg/dl in control) and obesity (BMI was 5.50 vs 3.10 in control), blood levels of beta-hydroxybutyrate (a ketone body formed in the liver) remained unchanged (821 vs 784 µM in control). Ketone body oxidation becomes a significant contributor to overall energy metabolism in extrahepatic tissues under numerous physiological conditions (neonatal period, starvation, post-exercise, low carbohydrate diet), when circulating ketone body concentrations increase from micromolar levels in normal fed state to 7 mM, and can rise to ∼20 mM under pathological conditions like diabetic ketoacidosis. We evaluated the effect of elevated beta-hydroxybutyrate levels on ECC and mitochondrial function in diabetic hearts. Exposure to 2-10 mM beta-hydroxybutyrate alone or in the presence of low concentrations of pyruvate (0.1-1 mM) improved cardiac ECC, preserved the redox environment, decreased ROS generation and mPTP opening with no effect on mitochondrial Ca2+ uptake. Therefore, these data suggest that type-2 diabetes patients potentially could benefit from ketogenic (low carbohydrate) diet which increases beta-hydroxybutyrate generation.