This study describes the electrophysiological responses of endoneurial preparations derived from rat sciatic nerve to acute hypoxia in vitro. Preparations from control rats exhibited a marked decline in compound action potential (CAP) amplitude coupled with an increase in latency, during 40 minutes exposure to 8% O2. In contrast, preparations from 4 week streptozotocin-diabetic rats showed a greatly reduced decline in CAP amplitude, with an increase in latency. Twice-daily insulin treatment of diabetic rats resulted in a pattern of CAP amplitude decline that initially resembled that of untreated diabetics but by 40 min was similar to controls, with latency again increasing during hypoxia. Nerves were also maintained in 25 mmol/l glucose, rather than the 5 mmol/l glucose of the above studies. Under such conditions the performance of nerves from diabetic rats was unaltered. Nerves from control rats exhibited an initial resistance to hypoxia but by 40 min CAP had declined to values of control rats maintained in 5 mmol/l glucose. An increase in latency during hypoxia was also noted in preparations from control or diabetic rats maintained in 25 mmol/l glucose. The maintenance of CAP amplitude during hypoxia by diabetic preparations is initially related to increased substrate availability, with an additional component that is not related to external glucose levels in vitro, and is absent after insulin treatment of diabetic rats.