Diabetes mellitus impairs axon regeneration, leading to chronic functional deficits after nerve injury. Here, we used a streptozotocin-induced model of type 1 diabetes and leptin receptor–deficient db/db mice representing type 2 diabetes to identify a key molecular mechanism underlying this failure and propose targeted strategies to restore regenerative capacity. As determined by Western blotting and immunohistochemistry, sensory neurons from diabetic mice displayed elevated p35 abundance, leading to cyclin-dependent kinase 5 (CDK5) hyperactivation and glycogen synthase kinase 3β (GSK3β)–dependent inhibitory phosphorylation of collapsin response mediator protein 2 (CRMP2), a critical regulator of axon growth. These changes, coinciding with impaired axon regeneration in injured sciatic nerves, occurred before the onset of diabetes-induced neuropathy in mice. Disrupting this pathway, through expression of constitutively active CRMP2, p35 knockdown, or blockade of the p35-CDK5 interaction by expression of the inhibitory protein CIP or injection of a TAT (transactivator of transcription) peptide, restored axon regeneration of cultured adult sensory neurons and accelerated motor and sensory recovery of diabetic mice. These manipulations did not affect nerve regeneration in nondiabetic mice. Similarly, GSK3β knockout prevented CRMP2 inactivation and rescued growth in diabetic neurons. Systemic administration of the peptide also enhanced motor and sensory nerve repair in long-term diabetic mice with established neuropathy. These findings identify p35 and CRMP2 as central effectors of diabetes-induced regenerative failure in mice, suggesting that the p35-CDK5-CRMP2 axis and GSK3β are promising therapeutic targets for promoting nerve repair in patients with diabetes.