Streptozotocin-induced diabetes mellitus is known to cause a reduction of both conduction velocity and axon caliber in sciatic nerves and also a decrease in muscle fiber size. The present study investigates whether the distal parts of the peripheral nervous system, including extra- and intrafusal muscle fibers, are more severely affected than the proximal segments in the diabetic state. Proximal and distal sensory nerve conduction velocities were monitored during a period of 3 months in rats rendered diabetic by injection of streptozotocin. Segments of the sciatic and ventral coccygeal nerves, and of the biceps femoris and lumbrical muscles, were studied by light and electron microscopy, including morphometric analysis. In contrast to previous studies, daily suboptimal insulin injections were given to prevent acute metabolic complications. Sensory conduction velocity in the ventral coccygeal nerve was significantly (P < 0.05) decreased in the diabetic rats compared to controls. Proximal and distal nerve segments were equally affected. Mean cross-sectional axon area of the sciatic nerve was moderately, but significantly (P < 0.05), smaller in insulin-treated diabetic rats than in controls. In both the sciatic nerve and the terminal, intrafusal nerve segments, occasional axons showed moderate dystrophic changes. Fibers of the intrafusal nerve segments appeared to be equally affected compared to the fibers in the sciatic nerve, although no quantitative comparison was made. The increase of small caliber skeletal muscle fibers in experimental streptozotocin-induced diabetes was confirmed. These findings indicate that proximal and distal segments of peripheral nerves are affected equally in the early stages of experimental diabetic neuropathy.