To investigate the effectiveness of tibial transverse transport (TTT) combined with modified neurolysis in treatment of diabetic foot ulcer (DFU) through a prospective randomized controlled study. The patients with DFU and diabetic peripheral neuropathy, who were admitted between February 2020 and February 2022, were selected as the research objects, of which 31 cases met the selection criteria and were included in the study. The patients were divided into two groups by random number table method. The 15 patients in the trial group were treated with TTT combined with modified neurolysis, and the 16 patients in the control group received treatment with TTT alone. There was no significant difference in gender, age, duration of DFU, ulcer area, Wagner classification, as well as preoperative foot skin temperature, visual analogue scale (VAS) score, ankle-brachial index (ABI), motor nerve conduction velocity (MNCV) of the common peroneal nerve, MNCV of the tibial nerve, MNCV of the deep peroneal nerve, two-point discrimination (2-PD) of heel, and cross-sectional area (CSA) of the common peroneal nerve between the two groups ( P>0.05). The time for ulcer healing, foot skin temperature, VAS scores, ABI, 2-PD of heel, and CSA of the common peroneal nerve before operation and at 6 and 12 months after operation were recorded and compared between groups. The differences in MNCV of the common peroneal nerve, MNCV of the tibial nerve, and MNCV of the deep peroneal nerve between pre-operation and 12 months after operation were calculated. All patients in both groups were followed up 12-24 months (mean, 13.9 months). The surgical incisions in both groups healed by first intention and no needle tract infections occurred during the bone transport phase. Ulcer wounds in both groups healed successfully, and there was no significant difference in the healing time ( P>0.05). During the follow-up, there was no ulcer recurrences. At 12 months after operation, the MNCV of the common peroneal nerve, the MNCV of the tibial nerve, and the MNCV of the deep peroneal nerve in both groups accelerated when compared to preoperative values ( P<0.05). Furthermore, the trial group exhibited a greater acceleration in MNCV compared to the control group, and the difference was significant ( P<0.05). The foot skin temperature, VAS score, ABI, 2-PD of heel, and CSA of the common peroneal nerve at 6 and 12 months after operation significantly improved when compared with those before operation in both groups ( P<0.05). The 2-PD gradually improved over time, showing significant difference ( P<0.05). The 2-PD of heel and VAS score of the trial group were superior to the control group, and the differences were significant ( P<0.05). There was no significant difference in ABI, foot skin temperature, and CSA of the common peroneal nerve between groups after operation ( P>0.05). Compared with TTT alone, the TTT combined with modified neurolysis for DFU can simultaneously solve both microcirculatory disorders and nerve compression, improve the quality of nerve function recovery, and enhance the patient's quality of life.