Diabetes mellitus (DM) is a major cause of peripheral neuropathy. More than 220 million people worldwide suffer from type 2 DM, which will, in approximately half of them, lead to the development of diabetic peripheral neuropathy. While of significant medical importance, the pathophysiological changes present in DPN are still poorly understood. To get more insight into DPN associated with type 2 DM, we decided to use the rodent model of this form of diabetes, the db/db mice. During the in-vivo conduction velocity studies on these animals, we observed the presence of multiple spiking followed by a single stimulation. This prompted us to evaluate the excitability properties of db/db peripheral nerves. Ex-vivo electrophysiological evaluation revealed a significant increase in the excitability of db/db sciatic nerves. While the shape and kinetics of the compound action potential of db/db nerves were the same as for control nerves, we observed an increase in the after-hyperpolarization phase (AHP) under diabetic conditions. Using pharmacological inhibitors we demonstrated that both the peripheral nerve hyperexcitability (PNH) and the increased AHP were mostly mediated by the decreased activity of Kv1-channels. Importantly, we corroborated these data at the molecular level. We observed a strong reduction of Kv1.2 channel presence in the juxtaparanodal regions of teased fibers in db/db mice as compared to control mice. Quantification of the amount of both Kv1.2 isoforms in DRG neurons and in the endoneurial compartment of peripheral nerve by Western blotting revealed that less mature Kv1.2 was integrated into the axonal membranes at the juxtaparanodes. Our observation that peripheral nerve hyperexcitability present in db/db mice is at least in part a consequence of changes in potassium channel distribution suggests that the same mechanism also mediates PNH in diabetic patients. ∗Current address: Department of Physiology, UCSF, San Francisco, CA, USA.