The connective tissue changes during Wallerian degeneration and subsequent regeneration were studied in the distal stump of transected sciatic nerves of Wistar rats. In half of the animals regeneration was prevented by suturing the distal stump to muscle and in the rest spontaneous regeneration was allowed. Intact contralateral nerves served as controls. By 4 weeks after transection the Schwann cell columns became surrounded by a layer of thin collagen fibrils that were, on average, 25-30 nm in diameter. This was only half of the fibril diameter observed elsewhere in the endoneurium or in control nerves. The layer of thin fibrils diminished in thickness when axonal regeneration reached the distal stump, especially as the axons became myelinated. At all stages of the experiment the fibril diameter distribution in the surrounding normal endoneurial stroma was comparable with that observed in control nerves. Segments of Schwann cell basement membrane were observed to be closely associated with collagen fibrils both in freely regenerating, as well as in non-regenerating, nerves. The diameter of these fibrils corresponded to that observed in the zone of thin fibrils surrounding the Schwann cell columns. Such areas were not found in control nerves. The data obtained show that deposition of thin collagen fibrils occurs around the Schwann cell columns as a reaction to transection. Our observations on the regenerating nerves indicate that this connective tissue reaction does not prevent regeneration in the early phases following injury and that its progression is limited concomitantly with axonal regeneration.