Diabetic peripheral neuropathy (DPN) is a common and debilitating complication of diabetes mellitus which affects individuals with both type 1 and type 2 diabetes mellitus (T2DM), presenting with sensory loss, pain, and progressive nerve dysfunction. DPN pathogenesis is multifactorial: chronic hyperglycemia activates the polyol, hexosamine, and protein kinase C (PKC) pathways, increases advanced glycation end-products, and drives oxidative stress, mitochondrial dysfunction, inflammation, and impaired neurotrophic signaling. In addition to hyperglycemia-driven mechanisms, dyslipidemia and microvascular insufficiency exacerbate neural ischemia and metabolic stress. Recent mechanistic, animal, and associative human studies further implicate amyloidogenic toxicity, particularly from human islet amyloid polypeptide (hIAPP), as a plausible contributory factor in peripheral nerve degeneration in T2DM, linking protein misfolding and aggregation to axonal damage and demyelination in DPN. Despite increased understanding of these mechanisms, current treatments remain mainly symptomatic. Emerging therapeutic strategies, including antioxidants, anti-inflammatory agents, modulators of mitochondrial function, amyloid oligomer modulators, neurotrophic enhancers, and regenerative approaches such as stem cells and gene-based therapies, offer potential to modify disease progression. The strength of evidence across these methods varies, ranging from mechanistic and animal studies to early human research and, in some cases, randomized clinical trials. Therefore, although several candidates show potential to alter the disease, few have demonstrated consistent benefits on objective measures of nerve structure or function in large clinical trials. This review summarizes the key mechanisms driving DPN in T2DM and highlights promising therapeutic innovations poised for clinical translation.