In this report, we present the results of investigation of the effects of prostaglandin E1 (PGE1) on entrapment neuropathy using a diabetic rat. A total of 60 male Sprague-Dawley rats were used in the study. The model of tibial nerve entrapment neuropathy associated with diabetes mellitus was created by streptozotocin-induced diabetic rats reared in cages with wire grid flooring. Rats were assigned to four groups: nondiabetic (n = 15), untreated diabetic (n = 15), diabetic treated with 30 μg/kg PGE1 (n = 15), and diabetic treated with 100 μg/kg PGE1 (n = 15). Pain tests and electrophysiological tests were performed at 0, 2, and 4 weeks, and assessments of gait, histology, and mRNA expression levels were performed at 4 weeks after initiating the PGE1 administration. In the 30 and 100 μg groups, the mechanical withdrawal thresholds measured by pain tests at 4 weeks (36.2 ± 16.4 g and 31.7 ± 15.3 g, respectively) and the motor conduction velocity (24.0 ± 0.2 m/s and 24.4 ± 0.3 m/s, respectively) were significantly higher than the untreated diabetic group (all P < 0.05) and lower than the nondiabetic group (all P < 0.001). In the gait analysis, the mean intensities in the 30 and 100 μg group (128.0 ± 20.1 a.u. and 109.0 ± 27.8 a.u., respectively) were significantly higher than the untreated diabetic (P < 0.01) and were not significantly different from the nondiabetic group (P = 0.81). Fiber density (P = 0.46) and fiber diameter (P = 0.15) did not show any significant differences. PGE1 significantly decreased nerve growth factor (NGF) mRNA and increased vascular endothelial growth factor (VEGF) mRNA in the tibial nerve (both P < 0.01). In conclusion, neurological deteriorations of diabetic rats were alleviated with PGE1, which is associated with inhibition of NGF and enhancement of VEGF at the entrapment site.