Low-grade persistent inflammation is a feature of diabetes-driven vascular complications, in particular activation of the Nod-like receptor family pyrin domain containing 3 (NLRP3) inflammasome to trigger the maturation and release of the inflammatory cytokine interleukin-1β (IL-1β). We investigated whether inhibiting the NLRP3 inflammasome, through the use of the specific small-molecule NLRP3 inhibitor MCC950, could reduce inflammation, improve vascular function, and protect against diabetes-associated atherosclerosis in the streptozotocin-induced diabetic apolipoprotein E-knockout mouse. Diabetes led to an approximately fourfold increase in atherosclerotic lesions throughout the aorta, which were significantly attenuated with MCC950 (P < 0.001). This reduction in lesions was associated with decreased monocyte–macrophage content, reduced necrotic core, attenuated inflammatory gene expression (IL-1β, tumor necrosis factor-α, intracellular adhesion molecule 1, and MCP-1; P < 0.05), and reduced oxidative stress, while maintaining fibrous cap thickness. Additionally, vascular function was improved in diabetic vessels of mice treated with MCC950 (P < 0.05). In a range of cell lines (murine bone marrow–derived macrophages, human monocytic THP-1 cells, phorbol 12-myristate 13-acetate–differentiated human macrophages, and aortic smooth muscle cells from humans with diabetes), MCC950 significantly reduced IL-1β and/or caspase-1 secretion and attenuated leukocyte–smooth muscle cell interactions under high glucose or lipopolysaccharide conditions. In summary, MCC950 reduces plaque development, promotes plaque stability, and improves vascular function, suggesting that targeting NLRP3-mediated inflammation is a novel therapeutic strategy to improve diabetes-associated vascular disease.