In response to transection injury, the distal segment of sciatic nerve produces a soluble factor which stimulates neurite outgrowth from 15 day embryonic rat dorsal root ganglion (DRG) neurons, and PC12 cells. This activity enhances survival of large sensory neurons, promotes myelination and has been designated SN. The expression of SN, undetectable in the perineurium and proximal segments, occurs solely in the endoneurium distal to the site of permanent transection. When the distal portion is removed immediately after transection, homogenized and the supernatant tested, there is little neurite promoting activity in the normal nerve. For the first 10 days after transection the major soluble factor present in the distal segment is NGF. The amount of neurite promoting activity increases after 10 days and appears to plateau at 30-35 days while the proportion that is inhibited by anti-NGF decreases. In a competitive receptor binding assay, SN does not compete with 125I-NGF for receptors on either DRG or PC12 cells. Separation using polyacrylamide-agarose followed by HPLC demonstrates that SN migrates with polypeptides of molecular weights 17.2 and 19.1 kDa.