The prevalence of diabetes worldwide is at pandemic levels, with the number of patients increasing by 5% annually. The most common complication of diabetes is peripheral neuropathy, which has a prevalence as high as 50% and is characterized by damage to neurons, Schwann cells and blood vessels within the nerve. The pathogenic mechanisms of diabetic neuropathy remain poorly understood, impeding the development of targeted therapies to treat nerve degeneration and its most disruptive consequences of sensory loss and neuropathic pain. Involvement of Schwann cells has long been proposed, and new research techniques are beginning to unravel a complex interplay between these cells, axons and microvessels that is compromised during the development of diabetic neuropathy. In this Review, we discuss the evolving concept of Schwannopathy as an integral factor in the pathogenesis of diabetic neuropathy, and how disruption of the interactions between Schwann cells, axons and microvessels contribute to the disease.