Recent electrophysiological and biochemical evidence implicates altered peripheral nerve Na-K-ATPase activity in the nerve conduction impairment of acute experimental diabetes. Composite in vitro nerve energy utilization is seriously impaired by experimental diabetes, yet is not modulated directly by insulin action on peripheral nerve. Therefore, we hypothesized that the reduction in diabetic nerve energy utilization reflects impaired nerve Na-K-ATPase activity. The reduction in steady-state energy utilization in diabetic peripheral nerve is shown to be quantitatively equal to the ouabain-inhibitable fraction of respiration, a measure of Na-K-ATPase activity in peripheral nerve. Na-K-ATPase activity in diabetic (but not nondiabetic) endoneurial preparations is influenced by medium solute concentration. Furthermore, diabetic nerve Na-K-ATPase activity and sodium-dependent myo-inositol uptake are similarly affected by medium solute changes, suggesting that the nerve sodium gradient may limit intracellular myo-inositol uptake in diabetic nerve. Conversely, because reduced diabetic nerve myo-inositol content impairs nerve Na-K-ATPase, a possible pathophysiological cycle of progressively deranged myo-inositol metabolism and Na-K-ATPase function may exist in diabetic peripheral nerve.