Diabetic peripheral neuropathy (DPN) is one of the most prevalent consequences of diabetes, with a high incidence and disability rate. The DPN’s pathogenesis is extremely complex and yet to be fully understood. Persistent high glucose metabolism, nerve growth factor deficiency, microvascular disease, oxidative stress, peripheral nerve cell apoptosis, immune factors, and other factors have been implicated in the pathogenesis of DPN. Astragalus mongholicus is a commonly used plant used to treat DPN in clinical settings. Its rich chemical components mainly include Astragalus polysaccharide, Astragalus saponins, Astragalus flavones, etc., which play a vital role in the treatment of DPN. This review aimed to summarize the pathogenesis of DPN and the studies on the mechanism of the effective components of Astragalus mongholicus in treating DPN. This is of great significance for the effective use of Chinese herbal medicine and the promotion of its status and influence on the world.