Aims/hypothesis: The aim of this study was to assess the relationships between lipid-lowering therapy and the prevalence and incidence of peripheral sensory neuropathy in type 2 diabetes mellitus. Methods: We analysed data from an observational cohort study, the Fremantle Diabetes Study (FDS), specifically, (1) a cross-sectional sample comprising 1,237 FDS participants with type 2 diabetes mellitus, and (2) a longitudinal subgroup of 531 individuals who had attended six consecutive annual assessments. Neuropathy was identified using the clinical portion of the Michigan Neuropathy Screening Instrument.Results: At entry, the cross-sectional sample had a mean ± SD age of 63.8 ± 11.3 years, 48.7% were men, median (interquartile range) diabetes duration was 4.0 (1.0–9.0) years, and 30.9% had peripheral neuropathy. Fibrates and statins were used by 3.5 and 6.8%, respectively. Multiple logistic regression analysis showed that older age, longer diabetes duration, central adiposity, increased height, higher fasting serum glucose, albuminuria and aboriginality were significant independent positive predictors of prevalent neuropathy, while systolic blood pressure and fibrate use (odds ratio 0.30, 95% CI 0.10–0.86; p = 0.025) were negatively associated. In the longitudinal subgroup, fibrate and statin use increased to 10.4 and 36.5%, respectively, over 5 years. In time-dependent Cox proportional hazards modelling, fibrate use [hazard ratio (HR) 0.52, 95% CI 0.27–0.98] and statin use (HR 0.65, 95% CI 0.46–0.93) were significant determinants of incident neuropathy (p ≤ 0.042). Conclusions/interpretation : These preliminary observational data suggest that therapy with a statin or a fibrate may protect against the development of diabetic peripheral sensory neuropathy, but there is a need for additional confirmatory evidence, preferably from randomised clinical trials.