We sought to develop and validate a standardized cutaneous nerve regeneration model and to define the rate of epidermal nerve fibre (ENF) regeneration first in healthy control subjects and then in neuropathic and neuropathy-free subjects with diabetes. Next, we assessed the effect of different factors on the rate of nerve fibre regeneration and investigated whether such an approach might offer insight into novel trial designs and outcome measures. All subjects had a standardized topical capsaicin dressing applied to the distal lateral thigh. ENF densities derived from skin biopsies were determined at baseline, after capsaicin treatment and at reinnervation time points. For each subject, the best fit line from post-denervation data was determined and the slope was used as the rate of regeneration. In healthy control subjects, regeneration was correlated with psychophysical sensory testing, electron microscopy studies and immunohistochemistry with alternative axonal membrane markers. Topical capsaicin application produced complete or nearly complete denervation of the epidermis in both control subjects and people with diabetes. The rate of regeneration was associated with the baseline ENF density (P < 0.001), but not age (P=0.75), gender (P=0.18), epidermal thickness (P=0.4) or post-capsaicin treatment density (P=0.7). ENF regeneration, as determined by recovery of ENF density, occurred at a rate of 0.177 ± 0.075 fibres/mm/day in healthy control subjects and was significantly reduced in subjects with diabetes (0.074 ± 0.064, P < 0.001) after adjusting for changes in baseline ENF density. Among subjects with diabetes, the presence of neuropathy was associated with a further reduction in regenerative rate (0.10 ± 0.07 versus 0.04 ± 0.03, P=0.03), though diabetes type (P=0.7), duration of diabetes (P=0.3) or baseline glycated haemoglobin (P=0.6) were not significant. These results have several implications. First, topical capsaicin application can produce a uniform epidermal nerve fibre injury that is safe and well tolerated, and offers an efficient strategy to measure and study nerve regeneration in man. Secondly, using our techniques, reduced rates of nerve regeneration were found in people with diabetes without evidence of neuropathy and indicate that abnormalities in peripheral nerve function are present early in diabetes, before signs or symptoms develop. These results suggest that regenerative neuropathy trials could include non-neuropathic subjects and that trial duration can be dramatically shortened.