This study examined the role of Schwann cells and hematogenous macrophages in myelin degradation and Ia antigen expression during Wallerian degeneration of rodent sciatic nerve. To identify and distinguish between macrophages and Schwann cells we used, in addition to electron microscopy, immunocytochemical staining of teased nerve fibres and 1 microns thick cryosections. Before the appearance of adherent macrophages the myelin sheath fragmented into ovoids, small whorls of myelin debris appeared within Schwann cell cytoplasm and the Schwann cell displayed numerous lipid droplets. However, at least in large fibres most myelin degradation and removal was accomplished or assisted by macrophages, identified by their expression of the ED1 marker. These cells began entering the nerve from blood vessels by day 2, migrated to degenerating nerve fibres and adhered to nerve fibres in the regions of the ovoids. There they penetrated the Schwann cell basal lamina to occupy an intratubal position and phagocytose myelin. During Wallerian degeneration a subpopulation of ED1-positive monocytes/macrophages expressed Ia antigen; Schwann cells were Ia-negative. Ia expression by monocytes/macrophages appeared to be a transient event and was not seen in post-phagocytic macrophages, as indicated by the fact that ED1-positive phagocytes with large vacuoles were Ia-negative. Our data show that both Schwann cells and macrophages play important roles in degrading and removing myelin during Wallerian degeneration. The expression of Ia antigen during Wallerian degeneration indicates that Ia expression need not necessarily reflect specific immune events but in some instances can represent a nonspecific response to PNS damage.