This review will focus on the impact of hyperglycemia‐induced oxidative stress in the development of diabetes‐related neural dysfunction. Oxidative stress occurs when the balance between the production of reactive oxygen species (ROS) and the ability of cells or tissues to detoxify the free radicals produced during metabolic activity is tilted in the favor of the former. Although hyperglycemia plays a key role in inducing oxidative stress in the diabetic nerve, the contribution of other factors, such as endoneurial hypoxia, transition metal imbalances, and hyperlipidemia have been also suggested. The possible sources for the overproduction of ROS in diabetes are widespread and include enzymatic pathways, auto‐oxidation of glucose, and mitochondrial superoxide production. Increase in oxidative stress has clearly been shown to contribute to the pathology of neural and vascular dysfunction in diabetes. Potential therapies for preventing increased oxidative stress in diabetic nerve dysfunction will be discussed. Copyright © 2006 John Wiley & Sons, Ltd.