Type II diabetes (T2D) affects over half a billion adults and is a risk factor for neurodegenerative disease. A major component of T2D, hyperglycemia (chronic excess blood glucose) causes mitochondrial damage while impairing their clearance via mitophagy, leading to neuronal cell death. Conversely, restoring mitochondrial turnover to maintain overall mitochondrial health is a means of neuroprotection. We investigated whether progranulin (PGRN), an endogenously-expressed neurotrophic factor that has been shown to be protective against frontotemporal dementia, also protects against hyperglycemic stress at the mitochondrial level. In vitro studies of primary cortex showed that high glucose led to mitochondrial dysfunction that was prevented with PGRN co-treatment. Additionally, we found that the expression and localization of key mitophagy proteins PTEN-INduced Kinase 1 (PINK1), Parkin, and p97 are affected by PGRN. Conversely, pharmacological inhibition of p97 prevented many of PGRN’s protective benefits under high-glucose conditions. These data showcase a novel mechanism of PGRN’s protection and a newly-characterized connection between PGRN and p97. While further studies in vivo are necessary to validate these findings, they provide unique insights into the protective mechanisms of PGRN against diabetic neurodegeneration.