Microvascular dysfunction is frequently seen in patients with Type 1 (insulin-dependent) diabetes. The present study was undertaken to examine whether skeletal muscle microcirculation in Type 1 diabetic patients is influenced by C-peptide. Forearm blood flow, capillary diffusion capacity and substrate exchange were studied during strenuous rhythmic forearm exercise on a hand ergometer. Measurements were made before and during i.v. infusion for 60 min of C-peptide or 0.9% NaCl in Type 1 diabetic patients and healthy subjects. During infusion the C-peptide levels in the diabetic patients increased from less than 0.05 nmol/l to 1.32±0.08 nmol/l. Prior to infusion forearm blood flow and capillary diffusion capacity during exercise were lower in the diabetic patients than the control subjects. During C-peptide infusion both variables increased in the diabetic patients (blood flow +27±4%, capillary diffusion capacity +52±9%) to levels similar to those in the healthy subjects, while no significant change was seen in the healthy control subjects or the diabetic patients given NaCl. Forearm uptake of oxygen and glucose in the diabetic patients increased markedly after C-peptide administration but were unchanged after NaCl infusion. Significant uptake of C-peptide to the deep forearm tissues was observed in the resting state; approximately 7±2% of the arterial C-peptide concentration was extracted by forearm tissues in diabetic patients as well as in healthy control subjects. It is concluded that replacement of C-peptide to physiological levels in young Type 1 diabetic patients results in a normalization of both blood flow and capillary diffusion capacity during exercise, as well as augmented uptake of oxygen and glucose by exercising muscle. The findings suggest that C-peptide may be of importance for microvascular function in exercising muscle in Type 1 diabetes. Finally, skeletal muscle is a major site of C-peptide disposal.