Transperineurial and epineurial vessels are innervated by plexuses of unmyelinated axons. Human sural nerve biopsies were examined ultrastructurally and immunocytochemically with an antibody which recognizes a neuronal and neuroendocrine protein, PGP 9.5, to characterize perivascular axons of these plexuses. Diabetics exhibited a greater degree of abnormal innervation of the vasa nervorum than nondiabetics with and without neuropathy. Abnormal innervation included: a reduction in the percentage of vessels exhibiting perivascular axons and a concomitant increase in the percentage of vessels having denervated Schwann cell units, particularly around vessels confined to perineurial compartments, and remaining axons in nerves from diabetics exhibited fewer varicosities. Denervated arterioles of diabetics also displayed structural changes indicating injury. The arteriolar structural defects and loss of neurogenic control of neural blood flow may lead to or aggravate endoneurial ischemia or hypoxia. The patchy, focal endoneurial fiber loss that is prominent in proximal nerves and associated with the distal myelinated fiber loss of some diabetic patients may be due in part to perivascular denervation of the vasa nervorum.