The axonal regenerative properties of the new immunosuppressant drug FK506 (tacrolimus) are further explored in this continuing study. In an initial report (Gold et al., 1994a), we described the ability of FK506 to reduce the time until return of function in the hind feet of rats following a sciatic nerve crush. In the present study, we examined the morphological correlate underlying this enhancement of functional recovery. In rats receiving daily subcutaneous injections of FK506 (1.0 mg/kg) for 18 d following a sciatic nerve crush the regenerating axons appeared larger in size compared to saline-injected control animals. Morphometric analysis of axonal calibers in the soleus nerve demonstrated that mean axonal areas for the largest 30% of axons were increased over axotomized control values by 93% in the FK506-treated animals. Next, the rate of axonal regeneration was determined by radiolabeling the L5 dorsal root ganglion (DRG) at 9 and 14 d following axotomy. Regression analysis of the outgrowth distances for sensory axons between 10 and 15 d revealed a 16% increase in regeneration rate. Electron microscopy of intramuscular nerve branches in the interosseus muscles confirmed that the axons in the FK506-treated animals were further advanced toward their targets; in some instances, axons were shown to reinnervate muscle spindles. The results are discussed in terms of the known ability of FK506 to inhibit the activity protein phosphatase 2B (calcineurin).