Schwann cells derived from human sural nerve may provide a valuable source of tissue for a cell-based therapy in multiple sclerosis. However, it is essential to show that transplanted human Schwann cells can remyelinate axons in adult CNS and improve axonal conduction. Sections of sural nerve were removed from amputated legs of patients with vascular disease or diabetes, and Schwann cells were isolated and cryopreserved. Suspensions of reconstituted cells were transplanted into the X-irradiation/ethidium bromide lesioned dorsal columns of immunosuppressed Wistar rat. After 3-5 weeks of extensive remyelination, a typical Schwann cell pattern was observed in the lesion zone. Many cells in the lesion were immunopositive for an anti-human nuclei monoclonal antibody. The dorsal columns were removed and maintained in an in vitro recording chamber; the conduction properties were studied using field potential and intra-axonal recording techniques. The transplanted dorsal columns displayed improved conduction velocity and frequency-response properties, and action potentials conducted over a greater distance into the lesion, suggesting that conduction block was overcome. These data support the conclusion that transplantation of human Schwann cells results in functional remyelination of a dorsal column lesion.