In contrast to earlier views, new data indicate that proinsulin C-peptide exerts important physiological effects and shows the characteristics of an endogenous peptide hormone. C-peptide in nanomolar concentrations binds specifically to cell membranes, probably to a G-protein coupled receptor. Ca(2+)- and MAP-kinase dependent signalling pathways are activated, resulting in stimulation of Na(+), K(+)-ATPase and endothelial nitric oxide (NO) synthase, two enzyme systems known to be deficient in diabetes. C-peptide may also interact synergistically with insulin signal transduction. Studies in intact animals and in patients with type 1 diabetes have demonstrated multifaceted effects. Thus, C-peptide administration in streptozotocin-diabetic animals results in normalization of diabetes-induced glomerular hyperfiltration, reduction of urinary albumin excretion and diminished glomerular expansion. The former two effects have also been observed in type 1 diabetes patients given C-peptide in replacement dose for up to 3 months. Peripheral nerve function and structure are likewise influenced by C-peptide administration; sensory and motor nerve conduction velocities increase and nerve structural changes are diminished or reversed in diabetic rats. In patients with type 1 diabetes, beneficial effects have been demonstrated on sensory nerve conduction velocity, vibration perception and autonomic nerve function. C-peptide also augments blood flow in several tissues in type 1 diabetes via its stimulation of endothelial NO release, emphasizing a role for C-peptide in maintaining vascular homeostasis. Continued research is needed to establish whether, among the hormones from the islets of Langerhans, C-peptide is the ugly duckling that--nearly 40 years after its discovery--may prove to be an endogenous peptide hormone of importance in the treatment of diabetic long-term complications.