Peripheral neuropathy and insensate limbs and digits cause significant morbidity in diabetic individuals. Previous studies showed that deletion of the receptor for advanced end-glycation products (RAGE) in mice was protective in long-term diabetic neuropathy. Here, we tested the hypothesis that RAGE suppresses effective axonal regeneration in superimposed acute peripheral nerve injury attributable to tissue-damaging inflammatory responses. We report that deletion of RAGE, particularly in diabetic mice, resulted in significantly higher myelinated fiber densities and conduction velocities consequent to acute sciatic nerve crush compared with wild-type control animals. Consistent with key roles for RAGE-dependent inflammation, reconstitution of diabetic wild-type mice with RAGE-null versus wild-type bone marrow resulted in significantly improved axonal regeneration and restoration of function. Diabetic RAGE-null mice displayed higher numbers of invading macrophages in the nerve segments postcrush compared with wild-type animals, and these macrophages in diabetic RAGE-null mice displayed greater M2 polarization. In vitro, treatment of wild-type bone marrow-derived macrophages with advanced glycation end products (AGEs), which accumulate in diabetic nerve tissue, increased M1 and decreased M2 gene expression in a RAGE-dependent manner. Blockade of RAGE may be beneficial in the acute complications of diabetic neuropathy, at least in part, via upregulation of regeneration signals.