Axotomy or crush of a peripheral nerve leads to degeneration of the distal nerve stump referred to as Wallerian degeneration (WD). During WD a microenvironment is created that allows successful regrowth of nerve fibres from the proximal nerve segment. Schwann cells respond to loss of axons by extrusion of their myelin sheaths, downregulation of myelin genes, dedifferentiation and proliferation. They finally aline in tubes (Büngner bands) and express surface molecules that guide regenerating fibres. Hematogenous macrophages are rapidly recruited to the distal stump and remove the vast majority of myelin debris. Molecular changes in the distal stump include upregulation of neurotrophins, neural cell adhesion molecules, cytokines and other soluble factors and their corresponding receptors. Axonal injury not only induces muscle weakness and loss of sensation but also leads to adaptive responses and neuropathic pain. Regrowth of nerve fibres occurs with high specificity with formerly motor fibres preferentially reinnervating muscle. This involves recognition molecules of the L2/HNK-1 family. Nerve regeneration occurs at a rate of 3-4 mm/day after crush and 2-3 mm/day after sectioning a nerve. Nerve regeneration can be fostered pharmacologically. Upon reestablishment of axonal contact Schwann cells remyelinate nerve sprouts and downregulate surface molecules characteristic for precursor/premyelinating or nonmyelinating Schwann cells. At present it is unclear whether axonal regeneration after nerve injury is impeded in neuropathies.