Consideration of the presence of a compressive neuropathy overlying an existing diabetic neuropathy in symptomatic patients and surgical decompression of these compressed nerves in selected patients is presented. The short-term results of 33 lower extremities treated with external neurolysis of the common peroneal, deep peroneal, and tarsal tunnel nerves are presented with a mean follow-up time of 3 months (range, 1 to 6 months). The surgery was performed in an attempt to relieve pain and to restore normal sensation in the foot. All procedures were performed under spinal or general anesthesia. Candidates for the procedure were type 1 or type 2 diabetics with symptomatic somatosensory neuropathy (pain, burning, tingling, and/or numbness) and preoperative computer-assisted neurosensory testing that confirmed the presence of elevated nerve threshold levels and axonal degeneration in the foot and leg. External neurolysis of the involved nerves provided good to excellent results in 90.0% of those patients with preoperative neuropathic pain, and restored sensation at good to excellent levels in 66.7% of those patients with preoperative neuropathic numbness. The mean visual analog score for pain assessment was 9.0 preoperatively and 3.2 postoperatively for those patients with pain as a symptomatic complaint (n = 30). There were 4 complications (12%) and all were early cases consisting of a noninfected wound dehiscence of the tarsal tunnel incision, which went on to heal without consequence. These initial short-term results suggest that external neurolysis of the common peroneal, deep peroneal, and tarsal tunnel nerves in selected patients with symptomatic diabetic neuropathy and an overlying compression neuropathy as determined by using computer-assisted neurosensory testing appears to be an effective treatment for providing pain relief and restoration of sensation in the foot.