A major and irreversible complication of diabetes is diabetic peripheral neuropathy (DPN), which can lead to significant disability and decreased quality of life. Prior work demonstrates the peptide hormone Angiotensin II (Ang II) is released locally in neuropathy and drives inflammation and impaired endoneurial blood flow. Therefore, we proposed that by utilizing a local thermoresponsive hydrogel injection, we could deliver inhibitors of angiotensin-converting enzyme (ACE) to suppress Ang II production and reduce nerve dysfunction in DPN through local drug release. The ACE inhibitor captopril was encapsulated into a micelle, which was then embedded into a reversibly thermoresponsive pluronics-based hydrogel matrix. Drug-free and captopril-loaded hydrogels demonstrated excellent product stability and sterility. Rheology testing confirmed sol properties with low viscosity at ambient temperature and increased viscosity and gelation at 37 °C. Captopril-loaded hydrogels significantly inhibited Ang II production in comparison to drug-free hydrogels. DPN mice treated with captopril-loaded hydrogels displayed normalized mechanical sensitivity and reduced inflammation, without side-effects associated with systemic exposure. Our data demonstrate the feasibility of repurposing ACE inhibitors as locally delivered anti-inflammatories for the treatment of sensory deficits in DPN. To the best of our knowledge, this is the first example of a locally delivered ACE inhibitor for the treatment of DPN.