Diabetic polyneuropathy is the most common acquired diffuse disorder of the peripheral nervous system. It is generally assumed that insulin benefits human and experimental diabetic neuropathy indirectly by lowering glucose levels. Insulin also provides potent direct support of neurons and axons, and there is a possibility that abnormalities in direct insulin signaling on peripheral neurons relate to the development of this disorder. Here we report that direct neuronal (intrathecal) delivery of low doses of insulin (0.1-0.2 IU daily), insufficient to reduce glycemia or equimolar IGF-I but not intrathecal saline or subcutaneous insulin, improved and reversed slowing of motor and sensory conduction velocity in rats rendered diabetic using streptozotocin. Moreover, insulin and IGF-I similarly reversed atrophy in myelinated sensory axons in the sural nerve. That intrathecal insulin had the capability of signaling sensory neurons was confirmed by observing that fluorescein isothiocyanate-labeled insulin given intrathecally accessed and labeled individual lumbar dorsal root ganglion neurons. Moreover, we confirmed that such neurons express the insulin receptor, as previously suggested by Sugimoto et al. Finally, we sequestered intrathecal insulin in nondiabetic rats using an anti-insulin antibody. Conduction slowing and axonal atrophy resembling the changes in diabetes were generated by anti-insulin but not by an anti-rat albumin antibody infusion. Defective direct signaling of insulin on peripheral neurons through routes that include the cerebrospinal fluid may relate to the development of diabetic peripheral neuropathy.