The early neuropathological development of demyelinating Canine Distemper Encephalomyelitis (CDE) was studied in SPF dogs. Neural tissues were examined up to 30 days post infection (PI). Three phases of activity were observed. The primary event (first observed 8 days PI) was a nonsuppurative encephalomyelitis associated with the initiation of central nervous system (CNS) infection by virus-laden lymphocytes. At 24 days PI noninflammatory demyelination occurred in well defined, subependymal foci. Cell fusion and syncytia formation accompanied this early demyelination. The third phase, found at day 30 PI in one dog showing signs of recovery, was a second wave of nonsuppurative inflammation. The initial encephalomyelitis was widely disseminated throughout the CNS but subsequent demyelination appeared to be initiated from within the ventricular system. Myelin was phagocytosed by endogeneous CNS macrophages often infected with Canine Distemper Virus (CDV). The possible importance of viral induced cell fusion as well as immune factors in the mechanism of demyelination are discussed.