Nerve conduction impairment in experimental diabetes has been empirically but not mechanistically linked to altered nerve myo-inositol metabolism. The phospholipid-dependent membrane-bound sodium-potassium ATPase provides a potential mechanism to relate defects in diabetic peripheral nerve myo-inositol-phospholipid metabolism, impulse conduction, and energy utilization. Therefore, the effect of streptozocin-induced diabetes mellitus and dietary myo-inositol supplementation on rat sciatic nerve sodium-potassium ATPase was studied. ATPase activity was measured enzymatically in sciatic nerve homogenates from 4-wk streptozocin diabetic rats and age-matched controls either fed a standard or 1% myo-inositol supplemented diet. The sodium-potassium ATPase components were assessed by ouabain inhibition or the omission of sodium and potassium ions. Diabetes reduced the composite ATPase activity recovered in crude homogenates of sciatic nerve. The 40% reduction in the sodium-potassium ATPase was selectively prevented by 1% myo-inositol supplementation (which preserved normal nerve conduction). Thus, in diabetic peripheral nerve, abnormal myo-inositol metabolism is associated with abnormal sodium-potassium ATPase activity. The mechanism of the effect of dietary myo-inositol to correct diabetic nerve conduction may be through changes in a sodium-potassium ATPase, possibly via changes in myo-inositol-containing phospholipids.