Evidence for the importance of peroxynitrite, a product of superoxide anion radical reaction with nitric oxide, in peripheral diabetic neuropathy is emerging. The role of specific nitric oxide synthase isoforms in diabetes-associated nitrosative stress and nerve fibre dysfunction and degeneration remains unknown. This study evaluated the contribution of inducible nitric oxide synthase (iNOS) to peroxynitrite injury to peripheral nerve and dorsal root ganglia and development of peripheral diabetic neuropathy. Control mice and mice with iNos (also known as Nos2) gene deficiency (iNos ( -/- )) were made diabetic with streptozotocin, and maintained for 6 weeks. Peroxynitrite injury was assessed by nitrotyrosine and poly(ADP-ribose) accumulation (immunohistochemistry). Thermal algesia was evaluated by paw withdrawal, tail-flick and hot plate tests, mechanical algesia by the Randall-Selitto test, and tactile allodynia by a von Frey filament test. Diabetic wild-type mice displayed peroxynitrite injury in peripheral nerve and dorsal root ganglion neurons. They also developed motor and sensory nerve conduction velocity deficits, thermal and mechanical hypoalgesia, tactile allodynia and approximately 36% loss of intraepidermal nerve fibres. Diabetic iNos ( -/- ) mice did not display nitrotyrosine and poly(ADP-ribose) accumulation in peripheral nerve, but were not protected from nitrosative stress in dorsal root ganglia. Despite this latter circumstance, diabetic iNos ( -/- ) mice preserved normal nerve conduction velocities. Small-fibre sensory neuropathy was also less severe in diabetic iNos ( -/- ) than in wild-type mice. iNOS plays a key role in peroxynitrite injury to peripheral nerve, and functional and structural changes of diabetic neuropathy. Nitrosative stress in axons and Schwann cells, rather than dorsal root ganglion neurons, underlies peripheral nerve dysfunction and degeneration.