Observations were made on myelinated fibre regeneration in diabetic sensory polyneuropathy assessed in sural nerve biopsy specimens. These confirmed that regenerative clusters initially develop within abnormally persistent Schwann cell basal laminal tubes. The number of regenerating fibres, identified by light microscopy, was found to decline in proportion to the reduction in total myelinated fibre density. The relative number of regenerating fibres was significantly greater in patients with insulin-dependent as compared with those with non-insulin-dependent diabetes after correction for age. There was a slight negative correlation between the relative proportion of regenerating fibres and age, but this was not statistically significant. The progressive reduction in the number of regenerating fibres with declining total fibre density indicates that axonal regeneration fails with advancing neuropathy. The production of nerve growth factor (NGF) and NGF receptors by denervated Schwann cells is likely to be important for axonal regeneration. To investigate whether the failure of axonal regeneration could be related to a lack of NGF receptor production by Schwann cells, we examined the expression of p75 NGF receptors by Büngner bands immunocytochemically. In comparison with other types of peripheral neuropathy, p75 NGF receptor expression appeared to take place normally. It is concluded that failure of axonal regeneration constitutes an important component in diabetic neuropathy. Its explanation requires further investigation.