Diabetic neuropathy was induced in male inbred rats by a single injection of streptozotocin. The diabetic state of the animals was prevented from detoriation by daily injections of small amounts of insulin. Before as well as 4 and 8 weeks after induction of diabetes compound action potentials evoked by electrical stimulation were repeatedly recorded from muscle and tail nerves of the same 55 animals. The motor nerve as well as the maximal proximal and distal nerve conduction velocity were determined. The neuropathy was established by comparing the increase in conduction velocity in a nondiabetic control group with the marked decrease in a group of diabetic animals receiving daily placebo injections. In a second group of diabetic animals daily injections of gangliosides (Cronassial) significantly counteracted the slowing of nerve conduction in comparison to that observed in the diabetic placebo group during the development of the neuropathy. This effect is discussed in terms of an increase of Na+-K+-ATPase or neuronal sprouting, possibly induced by the daily ganglioside application, and its usefulness in ameliorating human diabetic neuropathy.