Freeze-fracture studies have been made on the sciatic nerve of rats with chronic streptozotocin-induced diabetes mellitus. The density of intramembranous particles was reduced in both P and E faces of the axolemma of myelinated and unmyelinated axons, in myelin and in the perineurial cells. This may reflect a general reduction in protein synthesis, or excessive protein degradation, related to the diabetic state. The perineurial cells also showed gap junctions which are not normally present in adult rat peripheral nerve. These may represent a reaction to changes in perineurial activity consequent to alterations in the endoneurial tissue fluid.