Cross-anastomoses and autogenous grafts of unmyelinated and myelinated nerves were examined by electron microscopy and radioautography to determine if Schwann cells are multipotential with regard to their capacity to produce myelin or to assume the configuration seen in unmyelinated fibres. Two groups of adult white mice were studied. (A) In one group, the myelinated phrenic nerve and the unmyelinated cervical sympathetic trunk (CST) were cross-anastomosed in the neck. From 2 to 6 months after anastomosis, previously unmyelinated distal stumps contained many myelinated fibres while phrenic nerves joined to proximal CSTs became largely unmyelinated. Radioautography of distal stumps indicated that proliferation of Schwann cells occurred mainly in the first few days after anastomosis but was also present to a similar extent in isolated stumps. (B) In other mice, CSTs were grafted to the myelinated sural nerves in the leg. One month later, the unmyelinated CSTs became myelinated and there was no radioautographic indication of Schwann cell migration from the sural nerve stump to the CST grafts. Thus, Schwann cell proliferation in distal stumps is an early local response independent of axonal influence. At later stages, axons from the proximal stumps cause indigenous Schwann cells in distal stumps from the previously unmyelinated nerves to produce myelin while Schwann cells from the previously unmyelinated nerves to produce myelin while Schwann cells from the previously myelinated nerves become associated with unmyelinated fibres. Consequently, the regenerated distal nerve resembled the proximal stump. It is suggested that this change is possible because Schwann cells which divide after nerve injury reacquire the developmental multipotentiality which permits them to respond to aoxonal influences.