C-peptide is produced in equal amounts to insulin and is the best measure of endogenous insulin secretion in patients with diabetes. Measurement of insulin secretion using C-peptide can be helpful in clinical practice: differences in insulin secretion are fundamental to the different treatment requirements of Type 1 and Type 2 diabetes. This article reviews the use of C-peptide measurement in the clinical management of patients with diabetes, including the interpretation and choice of C-peptide test and its use to assist diabetes classification and choice of treatment. We provide recommendations for where C-peptide should be used, choice of test and interpretation of results. With the rising incidence of Type 2 diabetes in younger patients, the discovery of monogenic diabetes and development of new therapies aimed at preserving insulin secretion, the direct measurement of insulin secretion may be increasingly important. Advances in assays have made C-peptide measurement both more reliable and inexpensive. In addition, recent work has demonstrated that C-peptide is more stable in blood than previously suggested or can be reliably measured on a spot urine sample (urine C-peptide:creatinine ratio), facilitating measurement in routine clinical practice. The key current clinical role of C-peptide is to assist classification and management of insulin-treated patients. Utility is greatest after 3–5 years from diagnosis when persistence of substantial insulin secretion suggests Type 2 or monogenic diabetes. Absent C-peptide at any time confirms absolute insulin requirement and the appropriateness of Type 1 diabetes management strategies regardless of apparent aetiology.