Abstract: The various embodiments herein disclose a method and a system with a portable handheld diagnostic device for detecting and/or monitoring the prognosis of nerve impairment or diabetic peripheral neuropathy. The system provides a multi-parameter diabetic neuropathy-screening device to perform a combination of tactile threshold test, vibration threshold test, thermal threshold test and contactless skin-temperature measurement. The present invention provides a smartphone application that helps a user to operate/control the device, store and share the results. The smartphone application interacts with the hardware modules in the device and guides the user to perform the various tests. Further, the neuropathy diagnostic system provides a wireless feedback button that enables the subject to respond to various sensations during the course of the test.