The mechanisms of symptom production (other than a space-occupying lesion) and the diagnosis of tarsal tunnel syndrome remain controversial. To understand the diagnosis and treatment of tarsal tunnel syndrome in the presence of neuropathy, the known anatomy and pathophysiology related to the tarsal tunnel and the existing basic science and clinical evidence base related to these topics are reviewed. It is concluded that it is difficult to identify patients with tibial nerve compression at the ankle or foot region reliably with traditional electrodiagnostic techniques, even in the absence of neuropathy, and that the presence of a positive "Tinel" sign over the tibial nerve in the tarsal tunnel can identify this as a site of chronic nerve compression. For patients with tarsal tunnel syndrome and the comorbidity of diabetic polyneuropathy (DPN), it is concluded that a positive Tinel sign at the tarsal tunnel can predict a positive outcome for pain relief and restoration of sensation in 80% of the people who have decompression of the four medial ankle tunnels. With sensation improved, it is concluded that the natural history of DPN can be changed toward prevention of ulcers and amputation.