Microphysiological models, or “organ-on-a-chip” models are developing at a rapid rate due to their potential to decrease time and cost of preclinical trials in the pharmaceutical industry. This study proposes a physiological improvement to the current in vitro dual hydrogel microengineered model for the study of the peripheral nerve tissue, and an investigation of diabetic neuropathy to test the efficacy of the improved model. The model consists of hydrogel constructs with a growth restrictive polyethylene glycol diacrylate (PEG) boundary and a gelatin methacrylate (GelMA) growth permissive gel that allows for 3D neurite outgrowth from implanted embryonic rat dorsal root ganglion (DRG). The current model only contains nerve fibers developmentally dependent on nerve growth factor (NGF), which are small typically unmyelinated nociceptive nerve fibers. The other peripheral nerve fiber types, including proprioceptors and mechanoreceptors dependent on brain derived neurotrophic factor (BDNF) and neurotrophin-3 (NT-3) have not been studied previously in this model. The objective of this study is to develop an in vitro model of diabetic peripheral neuropathy with multiple fiber types to quantify the effects of glucose neurotoxicity on specific fiber type degeneration and conduction. Histology and immunohistochemistry analysis demonstrated the presence of multiple axonal phenotypes and increased percentage myelination in BDNF and NT-3 added (MGF) constructs, and electrophysiological testing of the tissue resulted in a shift of compound action potential (CAP) distribution in MGF samples. Acute diabetic neuropathy testing did not result in large variations in histology or immunohistochemistry but did demonstrate degradation of CAP amplitudes of electrophysiological recordings. A complete physiologically relevant acute model of diabetic neuropathy with multiple fiber types remains elusive to this point, and more work is necessary to fully understand the effects of the disease on this 3D in vitro microphysiological model.