To test the working hypothesis that neurosecretory neuronal regeneration is largely dependent on microenvironmental conditions at the lesion site, intact or predegenerated optic nerves were allografted intrahypothalamically into the hypothalamo-neurohypophysial tract. Neurosecretory axons regenerated consistently into all grafts. Early regeneration proceeded without glial cell association. At later stages of regeneration, however, neurosecretory axons were associated consistently with astrocytes that, within perivascular spaces, were surrounded by a basal lamina. Axons in contact with that basal lamina had the characteristics of terminals, suggesting functional recovery. It is postulated that it is the initial absence of a blood-brain barrier at the graft site that provides a microenvironment similar to that in the neural lobe and that induces neurosecretory axon regeneration.