The most common microvascular diabetic complication, diabetic peripheral polyneuropathy (DPN), affects type 1 diabetic patients more often and more severely. In recent decades, it has become increasingly clear that perpetuating pathogenetic mechanisms, molecular, functional, and structural changes and ultimately the clinical expression of DPN differ between the two major types of diabetes. Impaired insulin/C-peptide action has emerged as a crucial factor to account for the disproportionate burden affecting type 1 patients. C-peptide was long believed to be biologically inactive. However, it has now been shown to have a number of insulin-like glucose-independent effects. Preclinical studies have demonstrated dose-dependent effects on Na+,K(+)-ATPase activity, endothelial nitric oxide synthase (eNOS), and endoneurial blood flow. Furthermore, it has regulatory effects on neurotrophic factors and molecules pivotal to the integrity of the nodal and paranodal apparatus and modulatory effects on apoptotic phenomena affecting the diabetic nervous system. In animal studies, C-peptide improves nerve conduction abnormalities, prevents nodal degenerative changes, characteristic of type 1 DPN, promotes nerve fiber regeneration, and prevents apoptosis of central and peripheral nerve cell constituents. Limited clinical trials have confirmed the beneficial effects of C-peptide on autonomic and somatic nerve function in patients with type 1 DPN. Therefore, evidence accumulates that replacement of C-peptide in type 1 diabetes prevents and even improves DPN. Large-scale food and drug administration (FDA)-approved clinical trials are necessary to make this natural substance available to the globally increasing type 1 diabetic population.