Painful diabetic neuropathy (PDN) is an intractable complication of diabetes that affects 25% of patients. PDN is characterized by neuropathic pain and small-fiber degeneration, accompanied by dorsal root ganglion (DRG) nociceptor hyperexcitability and loss of their axons within the skin. The molecular mechanisms underlying DRG nociceptor hyperexcitability and small-fiber degeneration in PDN are unknown. We hypothesize that chemokine CXCL12/CXCR4 signaling is central to this mechanism, as we have shown that CXCL12/CXCR4 signaling is necessary for the development of mechanical allodynia, a pain hypersensitivity behavior common in PDN. Focusing on DRG neurons expressing the sodium channel Nav1.8, we applied transgenic, electrophysiological, imaging, and chemogenetic techniques to test this hypothesis. In the high-fat diet mouse model of PDN, we were able to prevent and reverse mechanical allodynia and small-fiber degeneration by limiting CXCR4 signaling or neuronal excitability. This study reveals that excitatory CXCR4/CXCL12 signaling in Nav1.8-positive DRG neurons plays a critical role in the pathogenesis of mechanical allodynia and small-fiber degeneration in a mouse model of PDN. Hence, we propose that targeting CXCR4-mediated DRG nociceptor hyperexcitability is a promising therapeutic approach for disease-modifying treatments for this currently intractable and widespread affliction.