The incorporation of [3H]myo-inositol into individual phosphoinositides and of [3H]glycerol into glycerolipids was determined in sciatic nerve obtained from normal and streptozotocin diabetic rats and incubated in vitro. The uptake of inositol into lipid was approximately linear with time. More than 80% of the label was present in phosphatidylinositol with the remainder divided about equally between phosphatidylinositol phosphate and phosphatidylinositol-4,5-bisphosphate. Labeling was unchanged 2 weeks after induction of diabetes, but was reduced by 32% after 20 weeks of the disease. Glycerol incorporation occurred primarily into phosphatidylcholine and triacylglycerol and was depressed up to 45% into major phosphoglycerides in nerves from both 2- and 20-week diabetic animals. Triacylglycerol labeling was also substantially decreased, and the reduction was comparable in intact and epineurium free nerve, suggesting that a metabolically active pool of this compound, which is sensitive to hyperglycemia and/or insulin deficiency, is located in or immediately adjacent to the nerve fibers. The considerable decline in incorporation of these lipid precursors in diabetic nerve may be related to impaired inositol transport and to decrease overall energy utilization by the tissue.