Diabetes commonly causes localized itching as well as bacterial skin infections, such as carbuncles, and fungal infections, such as Candida albicans, according to the American Diabetes Association. Skin conditions such as allergies and digital sclerosis are also related to diabetes.
Candida albicans, a yeast-like fungus, causes many of the fungal infections in people who have diabetes, explains the American Diabetes Association. The fungus leads to rashes of moist, red areas that have scales and tiny blisters. The fungus appears in areas such as under the breasts, between the fingers and toes, under the foreskin in uncircumcised men, and in the groin and armpits. A yeast infection, bad circulation or dry skin causes localized itching. Self-treatment involves limiting the number of baths, applying skin cream to affected areas after bathing, and using mild soap with moisturizer.