Acellular muscle grafts can support axonal regeneration over short gaps. Due to the lack of viable Schwann cells in the grafts, failure of regeneration is evident with increasing gap lengths. To create a biological nerve conduit, Schwann cells were implanted into acellular muscle. The grafts were then incubated in vitro and assessed histologically and morphometrically. For cultivation of the Schwann cells, rat sciatic nerves were allowed to predegenerate to obtain a high cell yield. Rat gracilis muscles were harvested and made acellular by a liquid nitrogen treatment. After Schwann cell implantation, the muscles were incubated in vitro for 2, 5, and 7 days. S100-immunostaining, NGF, and N-cadherin, characterized the Schwann cells within the muscle. Viability was assessed by fluoresceine-fluorescence staining. Proliferation was determined by BrdU-DNA incorporation. Cell implantation did not to affect Schwann cell viability. Cells were seen throughout the entire length of the muscle basal lamina. They aligned and formed a cell column. Immunostained for S-100, implanted cells showed 100 percent staining. N-cadherin and NGF were expressed by all of the S-100 positive cells. Predegeneration is considered to be a highly efficacious method, if a high yield of activated Schwann cells is required. The successful implantation of the cells into an acellular muscle provides the possibility of a biologic conduit, offering the advantage of large basal lamina tubes serving as a pathway for regenerating axons. It also provides the beneficial effects of viable Schwann cells that produce neurotrophic and neurotropic factors to support axonal regeneration. Functional outcomes require evaluation in further in vivo studies.