This review article on the degeneration and regeneration of peripheral nerve fibers was presented as a Plenary Lecture at the 2001 meeting of the Peripheral Nerve Society. It is accompanied by a reprint of Augustus Waller's 1850 article, which gave rise to the pathologic process termed Wallerian degeneration. This review is focused on the role of neuroinflammation in Wallerian degeneration and how immune mediators contribute to both axonal degeneration and regeneration. Similarities and differences between the PNS and CNS in terms of inflammation and microglial activation after nerve injury are discussed, and point towards progress in understanding the failure of nerve fiber regeneration in the CNS.