Protein kinase C (PKC)β2 is preferably overexpressed in the diabetic myocardium, which induces cardiomyocyte hypertrophy and contributes to diabetic cardiomyopathy, but the underlying mechanisms are incompletely understood. Caveolae are critical in signal transduction of PKC isoforms in cardiomyocytes. Caveolin (Cav)-3, the cardiomyocyte-specific caveolar structural protein isoform, is decreased in the diabetic heart. The current study determined whether PKCβ2 activation affects caveolae and Cav-3 expression. Immunoprecipitation and immunofluorescence analysis revealed that high glucose (HG) increased the association and colocalization of PKCβ2 and Cav-3 in isolated cardiomyocytes. Disruption of caveolae by methyl-β-cyclodextrin or Cav-3 small interfering (si)RNA transfection prevented HG-induced PKCβ2 phosphorylation. Inhibition of PKCβ2 activation by compound CGP53353 or knockdown of PKCβ2 expression via siRNA attenuated the reductions of Cav-3 expression and Akt/endothelial nitric oxide synthase (eNOS) phosphorylation in cardiomyocytes exposed to HG. LY333531 treatment (for a duration of 4 weeks) prevented excessive PKCβ2 activation and attenuated cardiac diastolic dysfunction in rats with streptozotocin-induced diabetes. LY333531 suppressed the decreased expression of myocardial NO, Cav-3, phosphorylated (p)-Akt, and p-eNOS and also mitigated the augmentation of O2(-), nitrotyrosine, Cav-1, and iNOS expression. In conclusion, hyperglycemia-induced PKCβ2 activation requires caveolae and is associated with reduced Cav-3 expression in the diabetic heart. Prevention of excessive PKCβ2 activation attenuated cardiac diastolic dysfunction by restoring Cav-3 expression and subsequently rescuing Akt/eNOS/NO signaling.