OBJECTIVE To compare central nervous system (CNS) activation in patients with and without diabetic peripheral neuropathy (DPN) during motor and motor imagery tasks and to correlate activation with functional performance. RESEARCH DESIGN AND METHODS Twenty-six participants (13 with DPN, 13 without DPN) underwent functional MRI during three tasks: ankle dorsi plantar flexion (motor task [MT]) and motor imagery tasks of walking on a smooth surface (SMIT) and rough surface (RMIT). Functional assessment included gait analysis, ankle muscle strength, and ankle range of motion. RESULTS The tasks activated the sensorimotor, motor preparation, visual processing, and decision-making regions. Activation was significantly lower in patients with DPN than in those without DPN during MT and SMIT but not RMIT. Poor functional performance in patients with DPN was associated with greater activation in motor preparation regions. CONCLUSIONS In patients with DPN, CNS responses appear muted compared with patients without DPN, but they remain capable of enhancing CNS activation when tasks are more challenging or when functional deficits are substantial.