The availability of cultures of normal cells (NCs) and Schwann cells (SCs) with and without fibroblasts has allowed us to investigate the sources of endoneurial and perineurial constituents of peripheral nerve. NCs cultured alone, devoid of ensheathment but healthy in appearance, lack basal lamina and extracellular fibrils. In contrast, when SCs accompany NCs, basal lamina and extracellular fibrils are consistently visible around SCs in outgrowth areas formed de novo in culture. These fibrils average 18 nm in diameter, exhibit a repeating banding pattern, and are trypsin-resistant and collagenase-sensitive. Collagen synthesis is also indicated by the incorporation of [14C]proline into peptide-bound hydroxy-proline in NC + SC or SC cultures. That the [14C]hydroxyproline polypeptides formed in NC + SC cultures are collagenous was determined in part by pepsin digestion-ammonium sulfate precipitation-polyacrylamide gel electrophoresis techniques; the 14C-polypeptides migrate to the positions of alpha 1 (I), alpha 2, alpha 1 (III), and alpha B chains of type I, type III, and A-B collagens. Also formed are thin, ruthenium red-preserved strands interconnecting basal laminae. SC ensheathment of axons is similar to that found in the animal; one SC is related to a number of unmyelinated axons or a single myelinated axon. This proclivity to ensheathe and myelinate axons indicates that SC function is not lost during the preparative procedures or after lengthy isolation in culture and provides the most reliable means for SC identification. Perineurial ensheathment and macrophages are lacking in NC + SC culture preparations divested of fibroblasts. We conclude that SCs do not form perineurium or the larger diameter collagen fibrils typical of endoneurium but that in combination with neurons they generate biochemically detectable collagens and morphologically visible basal lamina and thin collagenous fibrils.