Diabetic peripheral neuropathy (DPN) is the most prevalent complication of type 2 diabetes mellitus (T2DM), and it seriously affects the quality of life of patients. Tauroursodeoxycholic acid (TUDCA) is a bile acid that plays a protective role against various diseases. However, the function of TUDCA in DPN progression needs to be elucidated. Hence, this study clarified the action of TUDCA on DPN development and explored its mechanism of action. Fecal samples were collected from 50 patients with T2DM or DPN. Schwann cells induced by high levels were constructed to simulate an uncontrolled diabetic state. Cell viability and migration were measured using the CCK‐8 and wound‐healing assays, respectively. Reactive oxygen species and pyroptosis were detected using flow cytometry. Parabacteroides goldsteinii and Parabacteroides distasonis levels were decreased in the feces of patients with DPN. TUDCA enhanced the viability and migration ability of high glucose‐stimulated Schwann cells. In addition, Schwann cell pyroptosis stimulated by high glucose levels was inhibited by TUDCA. Furthermore, the protective roles of TUDCA in cell viability, migration ability, and pyroptosis of Schwann cells stimulated by high glucose were suppressed by the overexpression of NLRP3. TUDCA enhanced cell viability and migration and suppressed pyroptosis in Schwann cells stimulated by high glucose levels by modulating NLRP3 expression. Thus, TUDCA may be a promising drug for DPN therapy.