The mechanism by which the myelin sheath is degraded in demyelinating diseases is unknown. The demonstration of increased activities of both acid (cathepsins B, D, A) and neutral proteinases in tissue from experimental allergic encephalomyelitis (EAE) in animals and multiple sclerosis (MS, plaques) and the disappearance of myelin proteins implicate a role for proteolytic enzyme in myelin breakdown. The degradation of myelin basic protein (MBP) by proteinase yields encephalitogenic peptides and its loss has been found to cause structural alteration of the myelin sheath. This suggests that MBP degradation is an initial step in the breakdown of myelin in demyelinating diseases. A calcium-activated neutral proteinase (calpain), which degrades MBP, was found to increase in activity in MS tissue and cerebrospinal fluid (CSF), and its presence in myelin suggests that myelin may be autodigested in demyelinating disease. The source of increased proteinase activity has been indicated as macrophages, lymphocytes, and proliferative astrocytes (reactive cells). Increased proteinase activity is found in Schwann cells in Wallerian degeneration, and the presence of calpain in myelin-forming oligodendrocytes and Schwann cells suggests that these cells are likely sources of degradative enzymes. The involvement of proteolytic enzymes in the mechanism of myelin breakdown indicates the possible intervention with proteinase inhibitors for beneficial effect.