Recent advances in the understanding of the pathogenesis of diabetic neuropathy have been made in six areas. (1) There is support for the notion that a reduction in nerve free myoinositol may be responsible in part for the nerve conduction slowing in diabetic neuropathy. (2) There is further evidence of microvascular abnormalities, including morphometric evidence of multifocal fiber loss and of capillary changes in biopsied sural nerve. (3) There is evidence of endoneurial hypoxia, including the findings of reduced nerve blood flow and endoneurial oxygen tensions in chronic experimental diabetic neuropathy (EDN). (4) The major mechanisms of resistance to ischemic conduction failure (RICF) is the marked increase in nerve energy substrates. (5) Recent studies provide certain insights into clinical characteristics of human diabetic neuropathy (HDN), including the assymetric pattern of HDN, the paradox between liability to pressure palsies and RICF, and insulin-related acute painful neuropathy. (6) The suggested pathogenetic scheme incorporates the notion that once hypoxia is established, it may start a vicious cycle of further capillary damage and escalating hypoxia.