In this study, we investigated the effect of the xanthine oxidase (XO) inhibitor, allopurinol (ALP), on cardiac dysfunction, oxidative-nitrosative stress, apoptosis, poly(ADP-ribose) polymerase (PARP) activity and fibrosis associated with diabetic cardiomyopathy in mice. Diabetes was induced in C57/BL6 mice by injection of streptozotocin. Control and diabetic animals were treated with ALP or placebo. Left ventricular systolic and diastolic functions were measured by pressure–volume system 10 weeks after established diabetes. Myocardial XO, p22phox, p40phox, p47phox, gp91phox, iNOS, eNOS mRNA and/or protein levels, ROS and nitrotyrosine (NT) formation, caspase3/7 and PARP activity, chromatin fragmentation and various markers of fibrosis (collagen-1, TGF-β, CTGF, fibronectin) were measured using molecular biology and biochemistry methods or immunohistochemistry. Diabetes was characterized by increased myocardial, liver and serum XO activity (but not expression), increased myocardial ROS generation, p22phox, p40phox, p47phox, p91phox mRNA expression, iNOS (but not eNOS) expression, NT generation, caspase 3/7 and PARP activity/expression, chromatin fragmentation and fibrosis (enhanced accumulation of collagen, TGF-β, CTGF and fibronectin), and declined systolic and diastolic myocardial performance. ALP attenuated the diabetes-induced increased myocardial, liver and serum XO activity, myocardial ROS, NT generation, iNOS expression, apoptosis, PARP activity and fibrosis, which were accompanied by improved systolic (measured by the evaluation of both load-dependent and independent indices of myocardial contractility) and diastolic performance of the hearts of treated diabetic animals. Thus, XO inhibition with ALP improves type 1 diabetes-induced cardiac dysfunction by decreasing oxidative/nitrosative stress and fibrosis, which may have important clinical implications for the treatment and prevention of diabetic cardiomyopathy and vascular dysfunction.