To gain insight into the possible molecular mechanisms underlying axonal regeneration of neurons of the adult central nervous system (CNS), we have investigated, by in situ hybridization and by immunocytochemistry, the localization and sites of synthesis of the neurite outgrowth-promoting cell surface molecules L1, N-CAM and its highly sialylated form, N-CAM-PSA, in and around peripheral nerve grafts implanted into the thalamus of adult rats. Normal unoperated adult rat thalamus contains N-CAM and L1 but no N-CAM-PSA immunoreactive axons. Between 7 days and 13 weeks after graft implantation, L1, N-CAM and N-CAM-PSA were all present at the surface of axonal sprouts in the brain parenchyma close to grafts and in the central parts of Schwann cell columns within grafts. Schwann cell membranes were L1 and N-CAM positive at all postgraft survival times, more strongly at 2-4 weeks than other times, but were associated with N-CAM-PSA reaction product only where they abutted N-CAM-PSA positive axons. Schwann cell membranes apposed to basal laminae (which were avoided by regenerating CNS axons) were L1, N-CAM and N-CAM-PSA negative. Between 3 days and 8 weeks after grafting, N-CAM and L1 mRNA were generally weakly upregulated in neurons of the ipsilateral thalamus, but, most conspicuously, L1 mRNA was strongly upregulated in the neurons of the thalamic reticular nucleus; these neurons are known to regenerate axons very effectively into peripheral nerve grafts and are the probable source of most of the axons which enter thalamic grafts. N-CAM and L1 mRNA were also strongly upregulated in presumptive Schwann cells in the graft. These results show that regenerating CNS axons (re)express N-CAM-PSA and upregulate L1 and N-CAM, suggesting that all of these molecules may play a role in cellular interactions during the regeneration of CNS axons. Furthermore L1 synthesis appears to be particularly well correlated with the ability of CNS neurons to regenerate axons into peripheral nerve grafts.