Diabetes mellitus is a major cause of peripheral neuropathy, commonly manifested as distal symmetrical polyneuropathy. This review examines evidence for the importance of vascular factors and their metabolic substrate from human and animal studies. Diabetic neuropathy is associated with risk factors for macrovascular disease and with other microvascular complications such as poor metabolic control, dyslipidaemia, body mass index, smoking, microalbuminuria and retinopathy. Studies in human and animal models have shown reduced nerve perfusion and endoneurial hypoxia. Investigations on biopsy material from patients with mild to severe neuropathy show graded structural changes in nerve microvasculature including basement membrane thickening, pericyte degeneration and endothelial cell hyperplasia. Arterio-venous shunting also contributes to reduced endoneurial perfusion. These vascular changes strongly correlate with clinical defects and nerve pathology. Vasodilator treatment in patients and animals improves nerve function. Early vasa nervorum functional changes are caused by the metabolic insults of diabetes, the balance between vasodilation and vasoconstriction is altered. Vascular endothelium is particularly vulnerable, with deficits in the major endothelial vasodilators, nitric oxide, endothelium-derived hyperpolarising factor and prostacyclin. Hyperglycaemia and dyslipidaemia driven oxidative stress is a major contributor, enhanced by advanced glycation end product formation and polyol pathway activation. These are coupled to protein kinase C activation and omega-6 essential fatty acid dysmetabolism. Together, this complex of interacting metabolic factors accounts for endothelial dysfunction, reduced nerve perfusion and function. Thus, the evidence emphasises the importance of vascular dysfunction, driven by metabolic change, as a cause of diabetic neuropathy, and highlights potential therapeutic approaches.