Quantification of intra-epidermal nerve fibers (iENFs) is an important approach to stage diabetic peripheral neuropathy (DPN) and is a promising clinical endpoint for identifying beneficial therapeutics. Mechanistically, diabetes decreases neuronal mitochondrial function and enhancing mitochondrial respiratory capacity may aid neuronal recovery from glucotoxic insults. We have proposed that modulating the activity and expression of heat shock proteins (Hsp) may be of benefit in treating DPN. KU-32 is a C-terminal Hsp90 inhibitor that improved thermal hypoalgesia in diabetic C57Bl/6 mice but it was not determined if this was associated with an increase in iENF density and mitochondrial function. After 16weeks of diabetes, Swiss Webster mice showed decreased electrophysiological and psychosensory responses and a >30% loss of iENFs. Treatment of the mice with ten weekly doses of 20mg/kg KU-32 significantly reversed pre-existing deficits in nerve conduction velocity and responses to mechanical and thermal stimuli. KU-32 therapy significantly reversed the pre-existing loss of iENFs despite the identification of a sub-group of drug-treated diabetic mice that showed improved thermal sensitivity but no increase in iENF density. To determine if the improved clinical indices correlated with enhanced mitochondrial activity, sensory neurons were isolated and mitochondrial bioenergetics assessed ex vivo using extracellular flux technology. Diabetes decreased maximal respiratory capacity in sensory neurons and this deficit was improved following KU-32 treatment. In conclusion, KU-32 improved physiological and morphologic markers of degenerative neuropathy and drug efficacy may be related to enhanced mitochondrial bioenergetics in sensory neurons.