Homeostatic stress, such as that which occurs in diabetes, is associated with increased risk for the development of atherosclerosis. Atherosclerotic plaques of the artery wall are associated with both lipid accumulation and fibrous and/or calcified tissue accumulation. Vascular smooth muscle cells (VSMC) are derived from mesenchymal stem cells (MSC) which are capable of differentiating into adipocytes, chondrocytes and osteoblasts. MSC of the bone marrow are pushed toward the chondrogenic and adipogenic phenotypes in the presence of the stress hormones glucocorticoid and adrenocorticotropin (ACTH). This led us to hypothesize that the proliferative VSMC of the Goto-Kakizaki (GK) diabetic rat, when exposed to stress hormones will present an adipocytic and/or chondrogenic-like phenotype. VSMC of the GK rat were cultured using conditions that favor the multi-potential differentiation of MSC and were either left untreated, were treated with ACTH, dexamethasone (DEXA) or both. Cells were stained for lipid using oil-red-o, proteoglycan matrix using alcian blue and cell density using methylene blue. DEXA increased lipid nodule formation above the untreated control but the combined ACTH and DEXA treatment led to a significant increase above DEXA alone (lipid nodule #’s per field, DEXA 2.56 ± 1.63 vs. A+D 6.67 ± 1.68). These data suggest that stress hormones may contribute to VSMC matrix accumulation and lipid production during atherosclerosis development in diabetes.