Deprivation of neurotrophic factors contributes to the pathogenesis of diabetic neuropathy. However, the role of glial cell-derived neurotrophic factor (GDNF) in the pathogenesis of diabetic neuropathy remains unclear. The present study evaluated the pathogenic role of GDNF deficiency and the therapeutic potential of GDNF gene transfer for diabetic neuropathy. After injection of streptozotocin (STZ) for 2 weeks, diabetic rats displayed significant alteration in electrophysiological parameters, which was associated with structural changes and defective myelination in the sciatic nerves. The early diabetic neuropathy was accompanied by attenuation of the GDNF/GFRalpha1/Akt signaling cascade and depletion of sensory neuropeptides in the peripheral nerves. After detection of neuropathy, intramuscular GDNF gene transfer reversed the deficiency of GDNF/Akt signaling in the sciatic nerve and improved the neurological functions of diabetic rats. Moreover, GDNF gene delivery alleviated the axonal demyelination and restored the sensory neuropeptide levels in the sciatic nerve of diabetic rats. In summary, peripheral GDNF gene delivery ameliorates the diabetes-induced downregulation of the GDNF signaling complex in the peripheral nervous system and holds promises for treatment of diabetic neuropathy.