This study investigated the relationship between serum xanthine oxidase (XOD) activity and the occurrence of diabetic peripheral neuropathy (DPN) in type 2 diabetes mellitus (T2DM) patients. Serum XOD activity, ischemia-modified albumin (IMA), uric acid (UA), albumin, glycated hemoglobin (HbA1c), advanced glycation end products (AGE), total free thiols, atherogenic index of plasma (AIP), and body mass index (BMI) were measured in 80 T2DM patients (29 with and 51 without DPN), and 30 nondiabetic control subjects. Duration of diabetes, hypertension, medication, and microalbuminuria was recorded. Serum XOD activities in controls, non-DPN, and DPN were 5.7 ± 2.4 U/L, 20.3 ± 8.6 U/L, and 27.5 ± 10.6 U/L (p < 0.01), respectively. XOD activity was directly correlated to IMA, UA, BMI, HbA1c, and AGE, while inversely correlated to serum total free thiols. A multivariable logistic regression model, which included duration of diabetes, hypertension, AIP, HbA1c, UA, and XOD activity, revealed HbA1c [OR = 1.03 (1.00–1.05); p = 0.034] and XOD activity [OR = 1.07 (1.00–1.14); p = 0.036] as independent predictors of DPN. Serum XOD activity was well correlated to several other risk factors. These results indicate the role of XOD in the development of DPN among T2DM patients.