Several studies have indicated the involvement of oxidative stress in the development of diabetic neuropathy. In the present study, we have targeted oxidative stress mediated nerve damage in diabetic neuropathy using N-acetyl-l-cysteine (NAC), a potent antioxidant. After 8 weeks, streptozotocin-induced diabetic rats developed neuropathy which was evident from decreased tail-flick latency (thermal hyperalgesia). This was accompanied by decreased motor coordination as assessed by performance on rota-rod treadmill. Na(+) K(+) ATPase, a biochemical marker of development of diabetic neuropathy, was significantly inhibited in sciatic nerve of diabetic animals. NAC treatment at a daily dose between 1.4 and 1.5 g/kg body weight to diabetic animals for 7 weeks in drinking water ameliorated hyperalgesia, improved motor coordination and reversed reduction in Na(+) K(+) ATPase activity. There was an increase in lipid peroxidation in sciatic nerve of diabetic animals along with decrease in phospholipid levels, while NAC treatment attenuated lipid peroxidation and restored phospholipids to control levels. This was associated with decrease in glutathione and protein thiols. The activities of antioxidant enzymes; superoxide dismutase, catalase, glutathione reductase, glutathione peroxidase and glutathione-S-transferase were reduced in sciatic nerve of diabetic animals. Cytochrome c release and active caspase 3 were markedly increased in nerve from diabetic animals suggesting activation of apoptotic pathway. NAC treatment significantly ameliorated decrease in antioxidant defense and prevented cytochrome c release and caspase 3 activation. Electron microscopy revealed demyelination, Wallerian degeneration and onion-bulb formation in sciatic nerve of diabetic rats. NAC on the other hand was able to reverse structural deficits observed in sciatic nerve of diabetic rats. Our results clearly demonstrate protective effect of NAC is mediated through attenuation of oxidative stress and apoptosis, and suggest therapeutic potential of NAC in attenuation of diabetic neuropathy.