In recent years, accumulating evidence indicates a biological function for proinsulin C-peptide. These results challenge the traditional view that C-peptide is essentially inert and only useful as a surrogate marker of insulin release. Accordingly, it is now clear that C-peptide binds with high affinity to cell membranes, probably to a pertussis-toxin-sensitive G-protein-coupled receptor. Subsequently, multiple signalling pathways are potently and dose-dependently activated in multiple cell types by C-peptide with the resulting activation of gene transcription and altered cell phenotype. In diabetic animals and Type 1 diabetic patients, short-term studies indicate that C-peptide also enhances glucose disposal and metabolic control. Furthermore, results derived from animal models and clinical studies in Type 1 diabetic patients suggest a salutary effect of C-peptide in the prevention and amelioration of diabetic nephropathy and neuropathy. Therefore a picture of Type 1 diabetes as a dual-hormone-deficiency disease is developing, suggesting that the replacement of C-peptide alongside insulin should be considered in its management.