Circumscribed lesions were made within either the corticospinal tract or the ascending dorsal column tracts at the upper cervical level in adult rats. The responses of the tract axons were studied by orthograde transport from injections of horseradish peroxidase or biocytin. At 2 d, the ends of the cut axons were swollen, and the lesions induced en passant varicosities in the adjacent uncut axons. Although there have been reports of retraction, we found that even after several weeks, large numbers of cut axons still persisted in the central lesion area (where there was complete tissue destruction and intense macrophage infiltration), and also in the adjacent regions of the tract. The cut ends were expanded into a variety of shapes--large, complex, bulbous, and recurved--and many had profuse local branches with or without small, terminal-type varicosities. A suspension of Schwann cells cultured from neonatal sciatic nerve was injected by a minimally traumatic air pressure microinjection technique so as to form a bolus, comparable in size to the lesions, in either the corticospinal or the ascending dorsal column tracts at the upper cervical level. Despite previous findings that corticospinal axons do not elongate into peripheral nerve grafts, we found that both corticospinal and ascending dorsal column axons sprouted in response to contact with the transplanted Schwann cells. The response to the Schwann cells was much more rapid than to the lesions. By 2 d, in both descending and ascending tracts, both the axons that had been severed at the time of injection and also the adjacent uncut axons had already given rise to the branches that (unlike the localized sprouting seen after the long- term lesions) extended for considerable distances parallel to and fasciculating with each other and with the uncut tract axons. In addition, a mass of fine, tortuous, varicose branches invaded the superficial parts of the Schwann cell grafts, where they formed aborizations with small bead-like expansions resembling presynaptic boutons; as in their normal terminal fields, the aborizations formed by the corticospinal axons were smaller and finer than those formed by the ascending axons.