The presence of K+ channels on the Schwann cell plasma membrane suggests that Schwann cells may participate actively during action potential propagation in the peripheral nervous system. One such role for Schwann cells may be to maintain a constant extracellular concentration of K+ in the face of K+ efflux from a repolarizing axon. This buffering is likely to involve the influx of K+ through inward rectifying K+ channels. The molecular cloning of these genes allowed us to examine their expression and localization in Schwann cells in detail. In this study, we demonstrate the expression of two inward rectifying K+ channels, IRK1 and IRK3, in adult rat sciatic nerve. Immunocytochemistry using a polyclonal antibody against these proteins showed that the channels were highly localized at nodes in sciatic nerve. By immunoelectron microscopy, the nodal staining was shown to be concentrated in the microvilli of Schwann cells (also called nodal processes). The large surface area of the microvilli and their presence in the nodal space suggest involvement with ionic buffering. Thus, IRK1 and IRK3 are well suited to K+ buffering by virtue of both their biophysical properties and their localization. The restricted distribution of the inward rectifying K+ channels also provides an example of the highly regulated localization of ion channels to their specialized membrane domains. In the Schwann cell, where the nodal processes are a minute fraction of the total cell membrane, a potent mechanism must be present to concentrate the channels in this structure.