Diabetic neuropathy (DN), the most common complication of diabetes, frequently leads to foot ulcers and may progress to limb amputations. Despite continuous increase in incidence, there is no clinical therapy to effectively treat DN. Pathogenetically, DN is characterized by reduced vascularity in peripheral nerves and deficiency in angiogenic and neurotrophic factors. We will briefly review the pathogenetic mechanism of DN and address the effects and the mechanisms of cell therapies for DN. To reverse the changes of DN, studies have attempted to deliver neurotrophic or angiogenic factors for treatment in the form of protein or gene therapy; however, the effects turned out to be very modest if not ineffective. Recent studies have demonstrated that bone marrow (BM)-derived cells such as mononuclear cells or endothelial progenitor cells (EPCs) can effectively treat various cardiovascular diseases through their paracrine effects. As BM-derived cells include multiple angiogenic and neurotrophic cytokines, these cells were used for treating experimental DN and found to reverse manifestations of DN. Particularly, EPCs were shown to exert favorable therapeutic effects through enhanced neural neovascularization and neuro-protective effects. These findings clearly indicate that DN is a complex disorder with pathogenetic involvement of both vascular and neural components. Studies have shown that cell therapies targeting both vascular and neural elements are shown to be advantageous in treating DN.