Aim: To investigate the effect of normalizing vitamin B12 (B12) levels with oral B12 (methylcobalamin) 1000 μg/day for one year in patients with diabetic neuropathy (DN). Patients and methods: In this prospective, double-blind, placebo-controlled trial, 90 patients with type 2 diabetes on metformin for at least four years and both peripheral and autonomic DN were randomized to an active treatment group (n = 44) receiving B12 and a control group (n = 46) receiving a placebo. All patients had B12 levels less than 400 pmol/L. Subjects underwent measurements of sural nerve conduction velocity (SNCV), sural nerve action potential (amplitude) (SNAP), and vibration perception threshold (VPT), and they performed cardiovascular autonomic reflex tests (CARTs: mean circular resultant (MCR), Valsalva test, postural index, and orthostatic hypotension). Sudomotor function was assessed with the SUDOSCAN that measures electrochemical skin conductance in hands and feet (ESCH and ESCF, respectively). We also used the Michigan Neuropathy Screening Instrument Questionnaire and Examination (MNSIQ and MNSIE, respectively) and questionnaires to evaluate quality of life (QoL) and level of pain (pain score). Results: B12 levels increased from 232.0 ± 71.8 at baseline to 776.7 ± 242.3 pmol/L at follow-up, p < 0.0001, in the active group but not in the control group. VPT, MNSIQ, QoL, pain score, SNCV, SNAP, and ESCF significantly improved in the active group (p < 0.001, p = 0.002, p < 0.0001, p < 0.000, p < 0.0001, p < 0.0001, and p = 0.014, respectively), whereas CARTS and MNSIE improved but not significantly. MCR, MNSIQ, SNCV, SNAP, and pain score significantly deteriorated in the control group (p = 0.025, p = 0.017, p = 0.045, p < 0.0001, and p < 0.0001, respectively). Conclusions: The treatment of patients with DN with 1 mg of oral methylcobalamin for twelve months increased plasma B12 levels and improved all neurophysiological parameters, sudomotor function, pain score, and QoL, but it did not improve CARTS and MNSIE.