Progressive loss of pain perception and cutaneous nerve fibers are frequently observed in diabetic patients. We evaluated the feasibility of using thy1-YFP mice that express the yellowish-green fluorescent protein (YFP) in all of their sensory/motor neurons for noninvasive monitoring of cutaneous nerve fiber loss during diabetes. Fluorescent fibers in skin sections from the leg of thy1-YFP mice stained positive for the neuron-specific protein gene product 9.5 (PGP9.5), indicating that the cutaneous fluorescent fibers are indeed nerve fibers. In diabetic thy1-YFP mice, significant small cutaneous nerve fiber loss in the leg was observed at 3 months following the onset of diabetes, but loss of heat-induced pain perception occurred as early as 1 month following the onset of diabetes, indicating that functional impairment of sensory nerves precedes cutaneous nerve fiber loss. Immunostaining of skin sections of mice killed at 6 months following the onset of diabetes showed that parallel to the loss of small fluorescent nerve fibers, there was a significant decrease in fibers stained positive for calcitonin gene-related peptide, substance P, and purinoreceptor subtype in diabetic thy1-YFP mice. These mice will be useful for noninvasive monitoring of cutaneous nerve fiber degeneration and loss of heat-induced pain perception during diabetes and for the assessment of efficacy of therapeutic treatment of diabetic neuropathy.