Newly transected or denervated segments of isogeneic rat tibial nerve were implanted into the rat midbrain and sampled at weekly intervals up to 6 weeks post-operation. By 3 weeks, the peripheral nervous system (PNS) grafts were well-vascularized and contained Schwann cells, axons associated with Schwann cell processes, and macrophages. From 3 to 6 weeks, many axons within both the fresh and predegenerated grafts were myelinated by Schwann cells. The nerve fiber arrangement within the implant was similar to that of regenerating peripheral nerve in situ. The central nervous system (CNS) border of the implant was clearly demarcated by a rim of astrocytes behind which was a layer of regenerating oligodendrocytes and axons. Extending from the CNS margin were radial bridges of astroglial tissue which apprarently guided regenerating axons into the implant. Between the CNS and the PNS implant, abundant collagen deposition was present. The findings suggest that regenerating CNS axons grow via astroglial bridges into transplanted PNS tissue and are capable of stimulating the implanted Schwann cells to form myelin. Even Schwann cells deprived of axonal contact for prolonged periods were still capable of PNS myelin formation.