Background <p>The relationship between thyroid hormone sensitivity and diabetic peripheral neuropathy (DPN) remains unclear. The Thyroid Feedback Quantile-based Index using FT3 (TFQIFT3) is considered a sensitive marker of peripheral thyroid hormone activity. This study aimed to investigate the association between TFQIFT3 and DPN in euthyroid individuals with type 2 diabetes mellitus (T2DM).</p> Methods <p>This retrospective cross-sectional study analyzed euthyroid adults with T2DM hospitalized at the Endocrinology and Metabolism Department, Qingpu Branch of Zhongshan Hospital, Fudan University, from January 2019 to July 2023. Patients were categorized into quartiles based on TFQIFT3 levels. The primary outcome was DPN diagnosis, assessed via clinical symptoms and electromyography. Multivariable logistic regression was used to evaluate the association between TFQIFT3 and DPN, adjusting for relevant confounders.</p> Results <p>A total of 1,040 euthyroid adults with T2DM were included, with a mean age of 57.4 ± 13.3 years, and 62.8% were male. The prevalence of DPN was 42.3% in Q1, 40.8% in Q2, 39.2% in Q3, and 28.8% in Q4 (<i>P</i> = 0.006). After adjusting for all confounders, TFQIFT3 was significantly associated with DPN (OR = 0.68, 95% CI: 0.48–0.95, <i>P</i> = 0.023). Stratified analyses indicated a more pronounced TFQIFT3-DPN association in non-smokers, individuals with BMI ≤ 24&#xa0;kg/m², metformin users, and those with a diabetes duration &gt; 60 months.</p> Conclusion <p>Elevated TFQIFT3 levels were associated with a reduced risk of DPN. While TFQIFT3 has potential for DPN risk stratification, further prospective studies are needed to confirm these findings and explore the underlying mechanisms.</p> Clinical trial number <p>Not applicable.</p>