This review examines the changing insights into C-peptide and its potential for therapeutic actions against the backdrop of diabetic microvascular complications. C-peptide, formerly regarded as just a byproduct of insulin production, has recently surfaced as a bioactive peptide with important physiological effects. Findings indicate that C-peptide has anti-inflammatory and antioxidant capabilities, strengthens glucose utilization, and raises insulin sensitivity. Trial results for C-peptide replacement therapy show hope for treating diabetic neuropathy and nephropathy conditions. The article reviews the influence of C-peptide on cells, focusing on interactions with cell surface receptors and the stimulation of signaling molecules inside cells. C-peptide's role in generating nitric oxide, activating Na+K+ATPase, and improving the flow of blood in microvessels is emphasized. The review explores how C-peptide affects red blood cell deformability and its potential capabilities in reducing multiple diabetic complications. Besides, the article examines current research into C-peptide analogs that have a long-lasting effect and clinical trials that assess C-peptide replacement therapy. ErsattaTM, a new generation of weekly dosage disease-modifying replacement peptides, is seen as a promising advance in the treatment of chronic diabetes complications. Overall, this review stresses the increased acceptance of C-peptide as a powerful agent for the management of microvascular complications in diabetes, giving hope for superior results in patients with both type 1 and potentially type 2 diabetes.