Chronic diabetic neuropathy is associated with peripheral demyelination and degeneration of nerve fibers. The mechanism(s) underlying neuronal injury in diabetic sensory neuropathy remain poorly understood. Recently, we reported increased expression and function of transient receptor potential vanilloid 1 (TRPV1) in large dorsal root ganglion (DRG) neurons in diabetic sensory neuropathy. In this study, we examined the effects of TRPV1 activation on cell injury pathways in this subpopulation of neurons in the streptozotocin-induced diabetic rat model. Large DRG neurons from diabetic (6–8 weeks) rats displayed increased oxidative stress and activation of cell injury markers compared with healthy controls. Capsaicin (CAP) treatment induced decreased labeling of MitoTracker Red and increased cytosolic cytochrome c and activation of caspase 3 in large neurons isolated from diabetic rats. CAP treatment also induced oxidative stress in large diabetic DRG neurons, which was blocked by pre-treatment with caspase or calpain inhibitor. In addition, both μ-calpain expression and calpain activity were significantly increased in DRG neurons from diabetic rats after CAP treatment. Treatment with capsazepine, a competitive TRPV1 antagonist, markedly reduced these abnormalities in vitro and prevented activation of cell injury in large DRG neurons in diabetic rats in vivo. These results suggest that activation of the TRPV1 receptor activates pathways associated with caspase-dependent and calpain-dependent stress in large DRG neurons in STZ-diabetic rats. Activation of the TRPV1 receptor may contribute to preferential neuronal stress in large DRG neurons relatively early in diabetic sensory neuropathy.