To delineate the ability of diabetic nerves to regenerate and to determine the effect of aldose reductase (AR) inhibitors (ARIs) on nerve regeneration in diabetic neuropathy, we evaluated nerve regeneration electrophysiologically and morphologically after sciatic nerve crush injury in three groups of male Sprague-Dawley rats: untreated diabetic (streptozocin [STZ]-induced, n = 16), tolrestat-treated diabetic (n = 16), and age-matched controls (n = 16). Compound muscle action potentials (CMAPs) appeared 4 weeks after crush injury in the control group and 5 weeks after injury in both diabetic groups. Motor nerve conduction velocity (MNCV) in the crushed nerves was decreased in both diabetic groups compared with the control group throughout the experiment. However, this decrease was significantly prevented at 24 weeks with tolrestat treatment. Morphologically, the density of myelinated nerve fibers (MNFs) and the number of MNFs per fascicle were significantly decreased in untreated diabetic rats, but tolrestat significantly prevented the former decrease at 5 weeks and the latter at 24 weeks. The mean diameter of large MNFs (>4 microm) was smaller in the untreated diabetic group than in the control group, but this decrease also was significantly prevented with tolrestat treatment. These results suggest that nerve regeneration is impaired in diabetic neuropathy and that tolrestat can prevent this impairment.