Iatrogenic hypoglycemia is the most common acute diabetic complication, and it significantly increases morbidity. In people with diabetes, reduction in the levels of circulating stem and progenitor cells predicts adverse outcomes. To evaluate whether hypoglycemia in diabetes affects circulating stem cells and endothelial progenitor cells (EPCs). We performed an experimental hypoglycemia study (Study 1) and a case-control study (Study 2). Tertiary referral inpatient clinic. Type 1 diabetic patients (Study 1, n = 19); diabetic patients hospitalized for severe iatrogenic hypoglycemia, matched inpatient and outpatient controls (Study 2, n = 22/group). Type 1 diabetic patients underwent two in-hospital sessions of glucose monitoring during a breakfast meal with or without induction of hypoglycemia in random order. In Study 2, patients hospitalized for hypoglycemia and matched controls were compared. Circulating stem cells and EPCs were measured by flow cytometry based on the expression of CD34 and kinase insert domain receptor (KDR). In Study 1, the physiologic decline of CD34+KDR+ EPCs from 8 am to 2 pm was abolished by insulin-induced hypoglycemia in type 1 diabetic patients. In Study 2, diabetic patients hospitalized for severe iatrogenic hypoglycemia had significantly lower levels of CD34+ stem cells and CD34+KDR+ EPCs compared with diabetic inpatients or outpatient controls. In diabetic patients, a single mild hypoglycemic episode can compromise the physiologic EPC fluctuation, whereas severe hypoglycemia is associated with a marked reduction in stem cells and EPCs. These data provide a possible link between hypoglycemia and adverse outcomes of diabetes.