We have recently reported that minimally disturbed adult CNS white matter can support regeneration of adult axons by using a novel microtransplantation technique to inject minute volumes of dissociated adult rat dorsal root ganglion neurons directly into adult rat CNS pathways (Davies et al., 1997). This atraumatic injection procedure minimized scarring and allowed considerable numbers of regenerating adult axons immediate access to the adult CNS glial terrain where they rapidly extended for long distances. A critical question remained as to whether degenerating white matter at acute and chronic stages (up to 3 months) after injury could still support regeneration. To investigate this, we have microtransplanted adult sensory neurons into degenerating white matter of the adult rat spinal cord several millimeters rostral to a severe lesion of the dorsal columns. Regeneration of donor sensory axons in both directions away from the site of transplantation was robust even within white matter undergoing fulminant Wallerian degeneration despite intimate contact with myelin. Along their route, the regrowing axons extended large numbers of collaterals into the adjacent dorsal horn. However, after entering the lesion, the rapidly extending growth cones stopped and became dystrophic within high concentrations of reactive glial matrix. Our results offer compelling evidence that the major environmental impediment to regeneration in the adult CNS is the molecular barrier that forms directly at the lesion site, and that degenerating white matter beyond the glial scar has a far greater intrinsic ability to support axon regeneration than previously thought possible.