Diminished (Na,K)-ATPase activity in diabetic peripheral nerve is attributed to an underlying depletion of free myo-inositol, but no biochemical mechanism linking myo-inositol metabolism and (Na,K)-ATPase has emerged. Since inositol phospholipid turnover releases inositol-(1,4,5)-tris-phosphate and diacylglycerol, two putative "second messengers" that modulate protein kinase C, the effect of protein kinase C agonists on (Na,K)-ATPase activity was examined in diabetic nerve. Phorbol myristate acetate or the diacylglycerol sn-1,2-dioctanoylglycerol acutely normalized depressed ouabain-inhibitable respiration [a measure of (Na,K)-ATPase activity], suggesting that myo-inositol metabolism modulates (Na,K)-ATPase activity via protein kinase C, and that reduced myo-inositol impairs (Na,K)-ATPase activity in diabetic nerve by this mechanism.