The cellular and subcellular responses related to the survival or destruction and subsequent regeneration of muscle fibers within the freely grafted extensor digitorum longus muscle of the rat were examined by light and electron microscopy. A small number of fibers at the periphery of the grafts survived the initial ischemia but underwent denervation changes and accumulated lipid deposits. The majority of fibers in the grafts, however, became ischemic and underwent an intrinsic degeneration within 4 hours. Cell-mediated destruction of the degenerating fibers occurred as the grafts became revascularized. The basal laminae and some of the satellite cells were the only elements of the original fibers that persisted. Regeneration began at the periphery of the graft within three days after grafting and reached the center about three days later. After phagocytosis of the original fibers, presumptive myoblasts within the grafts differentiated into myoblasts and myotubes. The formation of myotubes followed a biphasic pattern of development comparable to that of normal fetal muscle. Although most of the myotubes were formed within the basal lamina remaining from the original fiber, there was also evidence for regeneration outside the basal lamina. Myotubes matured into muscle fibers which were essentially normal in apperance when examined up to 180 days after grafting. Some fibers, however, were atrophic, presumably due to a failure to become innervated, and some fibers were joined by myo-myous junctions. Pre-denervated grafts and Marcaine-treated grafts were also examined. There were more surviving fibers in pre-denervated grafts, and cell-mediated destruction of degenerating fibers proceeded more rapidly than in normal grafts. No surviving fibers were found in Marcaine-treated grafts. The changes in these grafts were otherwise similar to normal grafts. A schematic model of the spatial and temporal sequence of degeneration and regeneration within a free muscle graft is presented.