Diabetes triggers peripheral nerve alterations at a structural and functional level, collectively referred to as diabetic peripheral neuropathy (DPN). This work highlights the role of the liver X receptor (LXR) signaling pathway and the cross talk with the reactive oxygen species (ROS)–producing enzyme NADPH oxidase-4 (Nox4) in the pathogenesis of DPN. Using type 1 diabetic (T1DM) mouse models together with cultured Schwann cells (SCs) and skin biopsies from patients with type 2 diabetes (T2DM), we revealed the implication of LXR and Nox4 in the pathophysiology of DPN. T1DM animals exhibit neurophysiological defects and sensorimotor abnormalities paralleled by defective peripheral myelin gene expression. These alterations were concomitant with a significant reduction in LXR expression and increase in Nox4 expression and activity in SCs and peripheral nerves, which were further verified in skin biopsies of patients with T2DM. Moreover, targeted activation of LXR or specific inhibition of Nox4 in vivo and in vitro to attenuate diabetes-induced ROS production in SCs and peripheral nerves reverses functional alteration of the peripheral nerves and restores the homeostatic profiles of MPZ and PMP22. Taken together, our findings are the first to identify novel, key mediators in the pathogenesis of DPN and suggest that targeting LXR/Nox4 axis is a promising therapeutic approach.