Neonatal rat Schwann cells were cultured for several months with intermittent exposure to the mitogen, cholera toxin, and infrequent passaging to avoid premature transformation. A cell line SCL4.1/F7 was derived following the cloning of one of these long-term cultures by limiting dilution in liquid medium to select for cells capable of continuous proliferation in the absence of mitogen. F7 cells have been passaged 40 times (80-120 generations) over 14 months. Two substrains were identified at passage 20, one of which ,s diploid and the other which has trisomy 7 (t7). The cell line displays a characteristic flattened or crescent-shaped morphology, substratum adhesion which is calcium-dependent in the millimolar range, and pronounced contact-inhibition of growth. Confluent or subconfluent cultures readily cease proliferation and change to a differentiated (stellate/bipolar) morphology through the mediation of an autocrine growth-inhibitory factor. F7 cells grafted into the site of a crush injury in adult rat sciatic nerves remained viable and myelinated host axons. F7 is the first clonally derived diploid immortal Schwann cell line to have been published and should provide a suitable tool for the study of the biochemical and cellular basis of sheath cell-neuron interactions, myelin stabilization in peripheral nerve and Schwann cell growth autoregulation.