Diabetic peripheral neuropathy (DPN) is a common complication of diabetes mellitus that encompasses a heterogeneous group of conditions with diverse clinical manifestations. Despite its prevalence, no universally established classification or treatment approach is currently available. Recent findings have underscored the role of systemic inflammation, oxidative stress, and neurochemical imbalances in shaping DPN phenotypes, emphasizing the need for phenotype-specific diagnostic and therapeutic approaches. Advanced diagnostic techniques, including magnetic resonance imaging-based neuroimaging and quantitative sensory testing, are emerging as tools for phenotypic characterization. Therapeutic interventions are moving toward precision medicine, with targeted pharmacological and non-pharmacological strategies tailored to specific clinical presentations. Innovations such as digital health platforms, regenerative therapies, and combinatorial pharmacotherapy are promising for addressing primary neuropathic pain and its associated complications. This review synthesizes the current evidence on DPN phenotypes (painful, painless, and mixed forms), their underlying pathophysiological mechanisms, and the efficacy of treatment approaches. A framework for optimizing management strategies is also proposed. By leveraging novel insights into sensory phenotypes and treatment responsiveness, clinicians can adopt DPN phenotype-based treatment models to optimize patient care, improve treatment outcomes, reduce the substantial disease burden, and enhance patient quality of life.