C-peptide is formed in the biosynthesis of insulin and the two peptides are subsequently released in equimolar amounts to the circulation. C-peptide has long been considered to be without physiologic effects. Recent data now demonstrate that C-peptide in the nanomolar concentration range binds specifically to cell surfaces, probably to G protein-coupled receptors, with subsequent activation of Ca(2+)-dependent intracellular signaling pathways and stimulation of Na+, K(+)-ATPase activities. C-peptide replacement in animal models of type 1 diabetes results in diminished hyperfiltration, improved functional reserve, reduction of urinary albumin excretion, and prevention of glomerular and renal hypertrophy. Administration of C-peptide to physiologic concentrations in patients with type 1 diabetes and incipient nephropathy for periods of 3 hours to 3 months is accompanied by reduced glomerular hyperfiltration and filtration fraction, and diminished urinary albumin excretion. C-peptide replacement together with insulin therapy may be beneficial in type 1 diabetes patients with nephropathy.