The effect of silicone gel on the peripheral nerve was studied in Sprague-Dawley rats. Silicone gel was placed either extraneurally (N = 36) adjacent to or injected directly in the sciatic nerve (N = 20). Nerve histology was studied every 2 weeks over a 20-week period. Extraneural silicone gel elicited an intense inflammatory response characterized initially by predominantly histiocytes with a few eosinophils, lymphocytes, and foreign-body giant cells. The cellular response peaked at 4 weeks, after which time collagen deposition increased and the thickness of the cellular infiltrate surrounding the gel decreased. The gel was temporarily contained by the inflammatory response, but throughout the time course of the study, gel migration and breakup into smaller droplets occurred. Each droplet appeared to initiate the inflammation-fibrosis cycle anew. Perineural fibrosis was marked by 20 weeks, but there was no penetration of the epineurium by the gel. Intraneurally injected silicone gel also caused a delayed, but similar inflammatory response, eventually followed by fibrosis surrounding the gel. Intraneural gel tended to remain in larger droplets and did not migrate over the duration of this study. No direct evidence of gel toxicity to peripheral nerves was observed in either the extraneural or intraneural gel groups despite the initial intense inflammatory response and subsequent fibrosis.