Leprosy is the most common treatable peripheral nerve disorder worldwide. Deformity and disability result from nerve-function impairment; however, early treatment is associated with good outcome. Leprosy is often diagnosed late as many physicians have little experience with the clinical picture. Recent research using nerve conduction and thermal threshold tests has identified that nerve impairment is detectable long before it turns clinical. This discovery could have important implications for treatment because steroid therapy for nerve-function impairment that is detected clinically is unsatisfactory. Evidence that clinical neuropathy represents only the ‘tip of the iceberg’ of nerve damage, together with an understanding that the underlying inflammatory immunological processes require longer, more-aggressive treatment, could help usher in new and more-successful approaches to the treatment of nerve-function impairment in leprosy. This Review focuses on the neurological manifestations of leprosy and the pathophysiology of nerve damage. Early detection and treatment of nerve-function impairment are crucial for outcome, so special emphasis is given to developments in detecting and treating nerve impairment in leprosy early.