Axonal degeneration contributes to the transient and permanent neurological deficits seen in multiple sclerosis, an inflammatory disease of the central nervous system. To study the immunological mechanisms causing axonal degeneration, we induced experimental autoimmune encephalomyelitis (EAE) in wildtype Lewis rats and Lewis rats with a slowly progressive myelin degeneration due to proteolipid protein (PLP) overexpression. EAE was triggered either by the transfer of encephalitogenic T-cells alone or by the co-transfer of T-cells with demyelinating antibodies. Inducible nitric oxide synthase (iNOS) expression in perivascular macrophages was associated with a transient functional disturbance of axons, reflected by the focal and reversible accumulation of amyloid precursor protein. Clinical disease correlated with the numbers of APP positive axon spheroids. Demyelination was associated with a further increase of iNOS expression in macrophages and with a higher degree of axonal injury. Our studies suggest that nitric oxide and its metabolites contribute to axonal pathology and possibly also to subsequent neurological dysfunction in EAE.