Aldose reductase (AR), an enzyme in the polyol pathway, catalyzes the reduction of glucose to sorbitol. Sorbitol is subsequently converted to fructose by sorbitol dehydrogenase. The two enzymes constitute the sorbitol (polyol) pathway, the alternate route of glucose metabolism. The acceleration of this pathway and ensuing metabolic imbalances have been postulated to play a key role in the pathogenesis of diabetic complications. Using a transgenic animal model expressing human AR, we defined the primary role of this pathway in the development of functional and structural abnormalities elicited by diabetes. The inhibitors for AR would thus become effective therapeutic agents for diabetic complications. As AR is a member of the structurally related, NADPH-dependent aldo-keto reductase superfamily, other members of this family, coexisting with AR, may interact with the inhibitors to quench their action against AR. With our new immunoassay system, the levels of AR expressed in diabetic patients can be measured directly. The enzyme levels were significantly associated with the presence of complications, indicating that variable levels of AR expressed in diabetic individuals may affect the susceptibility or development of pathological changes associated with diabetes. In this review, recent advances in the understanding of the pathophysiological significance of AR are presented that would aid in the effective pharmacological intervention of diabetic complications.