The present study was designed to examine the effect of aldose reductase (AR) overexpression on the development of diabetic neuropathy by using mice transgenic for human AR. At 8 weeks of age, transgenic mice (Tg) and non-transgenic littermates (Lm) were made diabetic with streptozotocin. After 8 weeks of untreated diabetes, plasma glucose levels and the reduction in body weight were similar between the groups of diabetic animals. Despite the comparable levels of hyperglycaemia, levels of sorbitol and fructose were significantly greater in the peripheral nerve of diabetic Tg than in diabetic Lm (both P < 0.01). Ouabain sensitive Na(+),K(+)-ATPase activity was similarly decreased in both diabetic Tg and Lm. Protein kinase C activity in the sciatic nerve membrane fraction was unaffected by diabetes in Lm, but was reduced by nearly 40% in the diabetic Tg. Although both groups of diabetic animals exhibited a significant decrease in tibial nerve motor nerve conduction velocity (MNCV), this decrease was significantly more severe (P < 0.01) in diabetic Tg than in diabetic Lm. Consistent with these findings, nerve fibre atrophy was significantly more severe in diabetic Tg than in diabetic Lm (P < 0.01). These findings implicate increased polyol pathway activity in the pathogenesis of diabetic neuropathy. In support of this hypothesis, treating diabetic Tg with an aldose reductase inhibitor (WAY121-509, 4 mg/kg/day) for 8 weeks significantly prevented the accumulation of sorbitol, the decrease in MNCV and the increased myelinated fibre atrophy in diabetic Tg.