A line of SV40 transgenic mice (SV-202) developed a generalized peripheral neuropathy, islet cell adenomas of the pancreas, and hepatocellular carcinomas. The neuropathy was not directly associated with T-antigen expression in the nervous system. This study was designed to characterize the morphologic appearance and distribution of the neuropathologic lesions in SV-202 mice, and to relate the temporal development of peripheral nerve lesions to transgene-induced tumorigenesis in pancreatic islet cells. SV-202 mice developed an acute axonal degeneration that preferentially affected large diameter myelinated fibers. The onset of the neuropathy is closely correlated with the development of the hyperinsulinemia and hypoglycemia resulting from the islet cell adenomas.