The ability of Schwann cells to influence the direction and rate of neurite growth was investigated in a tissue culture model of the bands of Büngner of injured peripheral nerve. The arrangement of this culture system allowed testing of the growth-promoting properties of the Schwann cell surface and extracellular matrix (ECM) assembled by Schwann cells rather than soluble substances secreted into conditioned medium. Various components of peripheral nerve were examined separately as substrata for regenerating neurites: (i) Schwann cells and their ECM; (ii) Schwann cells alone; (iii) Schwann cell ECM alone; (iv) Schwann cells, fibroblasts, and their assembled ECM; (v) Schwann cells, their ECM and neurites; and (vi) purified laminin. Regenerating peripheral neurites were from explants of foetal rat dorsal root ganglia, which had been cultured for several weeks to rid them of accompanying non-neuronal cells, or from explants of foetal rat superior cervical ganglia, which contained non-neuronal cells. CNS neurites from the somatosensory cortex of embryonic rats were also studied; these neurites may be either first growing or regenerating. Neurites from all types of explants studied grew longer and were guided on a substratum of Schwann cells or Schwann cell ECM compared with a collagen substratum. The presence of fibroblasts during ECM assembly did not enhance the neurite growth-promoting activity. The design of the experiments suggested that the factors by which the Schwann cells or their ECM promoted and guided neurite outgrowth were surface-bound rather than medium-borne. Electron microscopic examination showed that neurites grew on either Schwann cell surfaces or basal lamina material. Attempts to define the chemical nature of the neurite growth-promoting effect of ECM by partial enzymatic digestion did not identify any single component as essential. Purified laminin was a more effective promoter of outgrowth of peripheral neurites than were Schwann cells or Schwann cell ECM. Cortical explants also grew on laminin, but neurites were accompanied on this substratum by a massive migration of non-neuronal cells; the neurites appeared to extend primarily on the non-neuronal cells rather than by direct attachment to the laminin substratum. This characteristic outgrowth of cortical non-neuronal cells on laminin was not consistently seen on Schwann cell ECM. In conclusion, either the Schwann cell surface or the ECM produced and assembled by Schwann cells promotes neurite outgrowth and guides that outgrowth from the several types of peripheral and CNS neurons studied in this report.