The characteristics and outcome of 68 newly diagnosed Type 2 diabetic patients who presented with clinically evident peripheral neuropathy were compared with matched controls who had no neuropathy at diagnosis. All subjects (34 male) whose median age was 68 (range 47-89) yr were identified from a computerized diabetes register and presented in 1982-1990. The groups were compared at diagnosis for haemoglobin A1, body mass index, blood pressure, smoking, and alcohol consumption, and for co-existent coronary and peripheral vascular disease. Mortality and morbidity were recorded to March 1991. Significantly more patients with neuropathy had co-existent peripheral vascular disease: 24(35%) compared to 6(9%) controls (p = 0.0021). Twenty (30%) of those with neuropathy and no controls had retinopathy at diagnosis, which was sight-threatening in 10. Seven (10%) with neuropathy but no controls presented with foot ulcers, one requiring limited amputation. Two more patients with neuropathy and one control subsequently developed foot ulcers resulting in one or more amputation in each group. Twenty-one (31%) of those with neuropathy and 14 (21%) controls died (p = 0.2109). In conclusion more diabetic patients with clinically evident peripheral neuropathy at diagnosis have peripheral vascular disease than matched patients without neuropathy. It is likely that macrovascular disease either exacerbates or causes the neuropathy in this group of patients. They are at high risk of developing foot ulceration and high priority should be given to foot care in planning their management.