Hyperexcitability after peripheral nerve injury occurs in axotomized and neighboring unaxotomized dorsal root ganglion (DRG) neurons and contributes to hypersensitivity. Previous studies have focused on proximal nerve injury and have not examined unaxotomized neurons innervating the site of sensory testing. The current study used a distal nerve injury (partial sciatic nerve ligation [PSNL]), and identified, using fluorescent tracers, axotomized and unaxotomized neurons innervating the site of hypersensitivity. We hypothesized that reduced hypersensitivity after perineural clonidine was associated with reduced hyperexcitability of DRG neurons. Rats underwent sham or PSNL surgery, followed 2 wk later by a single injection at the injury site of clonidine or saline. PSNL, but not sham surgery, reduced hindpaw mechanical withdrawal threshold, and clonidine, but not saline, partially reversed this effect 3 days after injection. Intracellular recording of neurons in whole DRG demonstrated similar changes in membrane properties and excitability in unaxotomized and axotomized neurons after PSNL compared with sham surgery, primarily depolarized resting membrane potential, reduced rheobase, presence of oscillations, and capability to fire repetitively. Most of these changes were present in small-, medium-, and large-diameter neurons. Perineural clonidine 3 days later significantly reversed many of these effects, whereas saline was without effect. We speculate that perineural clonidine reduces signals, likely proinflammatory cytokines and prostaglandins produced during Wallerian degeneration after nerve injury, which drive changes in ion channel expression in DRG somata leading to hyperexcitability and hypersensitivity.