Antegrade, target-directed axonal regeneration is the explicit goal of nerve repair. However, aberrant and dysfunctional regrowth is commonly observed as well. At the site of surgical nerve coaptation, axonal sprouts encounter fibrotic connective tissue rich in growth-inhibiting chondroitin sulfate proteoglycan that may contribute to misdirection of axonal regrowth. In the present study, we tested the hypothesis that degradation of chondroitin sulfate proteoglycan by application of chondroitinase at the site of nerve repair can decrease aberrant axonal growth. Adult rats received bilateral sciatic nerve transection and end-to-end repair. One nerve was injected with chondroitinase ABC and the contralateral nerve treated with vehicle alone. After 28 weeks, retrograde axonal regeneration was assessed proximal to the repair by scoring neurofilament-immunopositive axons within the nerve (intrafascicular) and outside the nerve proper (extrafascicular). Intrafascicular retrograde axonal growth was equivalent in both control and chondroitinase treatment conditions. In contrast, chondroitinase treatment caused a pronounced (93%) reduction in extrafascicular retrograde axonal growth. The decrease in axon egress from the nerve was coincident with an increase in antegrade regeneration and improved recovery of motor function. Based on these findings, we conclude that chondroitinase applied at the site of nerve transection repair averts dysfunctional extrafascicular retrograde axonal growth.