Glia-derived nexin (GDN), also known as protease nexin I, is a serine protease inhibitor of deduced relative molecular mass 41,700, identified in conditioned media of glioma cells by its neurite-promoting activity. GDN can promote neurite outgrowth in vitro from neuroblastoma cells, sympathetic neurons and hippocampal neurons (L. Farmer et al., manuscript in preparation). In vivo, GDN is constitutively expressed in all parts of the olfactory system, where axonal regeneration and neurogenesis occur continuously throughout life. This observation indicates that GDN could be important for axonal regeneration in vivo. To investigate this possibility, we have taken advantage of the fact that damage to nerves in the peripheral nervous system leads to their regeneration, whereas in the central nervous system no such regeneration can occur. Here we report that after lesion of the rat sciatic nerve there is a large transient increase in the amount of GDN messenger RNA and of released GDN. The cells showing GDN immunoreactivity are mainly localized distal to the lesion site. These results further support the suggestion that GDN is important for axonal regeneration in vivo, and indicate that protease inhibitors could have a role in Wallerian degeneration and peripheral nerve regeneration.