Diabetic neuropathy, with its major clinical sequels, notably neuropathic pain, foot ulcers, and autonomic dysfunction, is associated with substantial morbidity, increased risk of mortality, and reduced quality of life. Despite its major clinical impact, diabetic neuropathy remains underdiagnosed and undertreated. Moreover, the evidence supporting a benefit for causal treatment is weak at least in patients with type 2 diabetes, and current pharmacotherapy is largely limited to symptomatic treatment options. Thus, a better understanding of the underlying pathophysiology is mandatory for translation into new diagnostic and treatment approaches. Improved knowledge about pathogenic pathways implicated in the development of diabetic neuropathy could lead to novel diagnostic techniques that have the potential of improving the early detection of neuropathy in diabetes and prediabetes to eventually embark on new treatment strategies. In this review, we first provide an overview on the current clinical aspects and illustrate the pathogenetic concepts of (pre)diabetic neuropathy. We then describe the biomarkers emerging from these concepts and novel diagnostic tools and appraise their utility in the early detection and prediction of predominantly distal sensorimotor polyneuropathy. Finally, we discuss the evidence for and limitations of the current and novel therapy options with particular emphasis on lifestyle modification and pathogenesis-derived treatment approaches. Altogether, recent years have brought forth a multitude of emerging biomarkers reflecting different pathogenic pathways such as oxidative stress and inflammation and diagnostic tools for an early detection and prediction of (pre)diabetic neuropathy. Ultimately, these insights should culminate in improving our therapeutic armamentarium against this common and debilitating or even life-threatening condition.