Abstract: Melatonin exhibits an array of biological activities, including antioxidant and anti-inflammatory actions. Diabetic neuropathy is one of the complications of diabetes with a prevalence rate of 50–60%. We have previously reported the protective effect of melatonin in experimental diabetic neuropathy. In this study, we investigated the role of nuclear factor-kappa B (NF-κB) and nuclear erythroid 2-related factor 2 (Nrf2) in melatonin-mediated protection against streptozotocin-induced diabetic neuropathy. Melatonin at doses of 3 and 10 mg/kg was administered daily in seventh and eighth week after diabetes induction. Motor nerve conduction velocity and nerve blood flow were improved in melatonin-treated animals. Melatonin also reduced the elevated expression of NF-κB, IκB-α, and phosphorylated IκB-α. Further, melatonin treatment also reduced the elevated levels of proinflammatory cytokines (TNF-α and IL-6), iNOS and COX-2 in sciatic nerves of animals. The capacity of melatonin to modulate Nrf2 pathway was associated with increased heme oxygenase-1 (HO-1) expression, which strengthens antioxidant defense. This fact was also established by decreased DNA fragmentation (because inhibition of excessive oxidant-induced DNA damage) in the sciatic nerve of melatonin-treated animals. The results of this study suggest that melatonin modulates neuroinflammation by decreasing NF-κB activation cascade and oxidative stress by increasing Nrf2 expression, which might be responsible at least in part, for its neuroprotective effect in diabetic neuropathy.