The benefit of enhanced shear stress to the vascular endothelium has been well-documented in conduit arteries but is less understood in skin microcirculation. The aim of this study was to provide physiological evidence of the vascular changes in skin microcirculation induced by intermittent pneumatic compression (IPC) of 1 s cuff inflation (130 mmHg) every 20 s to the palm of the hand for 30 min. The oxygenation and hemodynamics of dorsal mid-phalangeal finger skin microcirculation were assessed by laser Doppler fluximetry and reflectance spectroscopy before, during, and after IPC in 15 young (18-39 years old) and 39 older (40-80 years old) controls and 32 older subjects with type 2 diabetes mellitus. Each individual cuff inflation induced: 1) brief surge in flux immediately after cuff deflation followed by 2) transitory reduction in blood oxygen for ∼4 s, and 3) a second increase in perfusion and oxygenation of the microcirculation peaking ∼11 s after cuff deflation in all subject groups. With no significant change in blood volume observed by reflectance spectroscopy, despite the increased shear stress at the observed site, this second peak in flux and blood oxygen suggests a delayed vasoactive response upstream inducing increased arterial influx in the microcirculation that was higher in older controls and subjects with diabetes compared to young controls (P < 0.001, P < 0.001, respectively) and achieving maximum capillary recruitment in all subject groups. Transitory hypoxic stimuli with conducted vasodilation may be a mechanism through which IPC enhances capillary perfusion in skin microcirculation independent of age and type 2 diabetes mellitus.NEW & NOTEWORTHY This study demonstrates that hand intermittent pneumatic compression evokes transitory hypoxic stimuli in distal finger skin microcirculation inducing vasodilation of arterial inflow vessels, enhanced perfusion, and maximum capillary recruitment in young and older subjects and older subjects with type 2 diabetes mellitus. Enhanced shear stress in the microcirculation did not appear to induce local skin vasodilation.