Axolemma-enriched and myelin-enriched fractions were prepared from bovine CNS white matter and conjugated to fluorescein isothiocyanate (FITC). Both unlabelled and FITC-labelled axolemma and myelin were mitogenic for cultured rat Schwann cells. Treatment of Schwann cells with the FITC-labelled mitogens for up to 24 h resulted in two distinct morphological appearances. FITC-myelin-treated cells were filled with numerous round, fluorescent-labelled intracellular vesicles, while FITC-axolemma-treated cells appeared to be coated with a patchy, ill-defined fluorescence, primarily concentrated around the cell body but extending onto the cell processes. These observations were corroborated under phase microscopy. Electron microscopy revealed multiple, membrane-bound, membrane-containing phagosomes within myelin-treated cells and to a far lesser extent in axolemma-treated cells. The effect on the expression of the myelin-mediated and axolemma-mediated mitogenic signal when Schwann cells were treated with the lysosomal inhibitors, ammonium chloride and chloroquine, was evaluated. The mitogenicity of myelin was reduced 70-80% by these agents whereas the mitogenicity of axolemma was not significantly altered under these conditions. These results suggest that axolemma and myelin stimulate the proliferation of cultured Schwann cells by different mechanisms. Myelin requires endocytosis and lysosomal processing for expression of its mitogenic signal; in contrast, the mitogenicity of axolemma may be transduced at the Schwann cell surface.