Two hundred and two benign and malignant soft tissue lesions were studied for the presence of S-100 protein by means of the peroxidase-antiperoxidase technique on formalin-fixed, paraffin-embedded tissue. Virtually all benign nerve sheath tumors (neurofibroma, neurilemoma, and granular cell tumor) contained numerous immunoreactive S-100-positive cells. Only one-half (18 of 36) of malignant schwannomas contained the protein, suggesting that its presence is an expression of differentiation in Schwann cell tumors. S-100 protein was not identified within pure neuroblastic tumors (neuroblastoma, neuroepithelioma) but could be identified within rare cells of the ganglioneuroblastoma and within the Schwann cell component of ganglioneuroma. It was also identified within most melanocytic tumors (cellular blue nevus, clear cell sarcoma, and melanoma). In fact, its constant presence in melanoma indicates that it may prove to be an independently reliable method for diagnosing amelanotic forms. It is also sporadically present within a variety of mesenchymal lesions including lipoma, liposarcoma, synovial chondromatosis, chondrosarcoma, fibromatosis, histiocytosis X, and chordoma. Although S-100 protein is highly characteristic of neural crest-derived tumors, it is not restricted to them and, consequently, must be interpreted cautiously. It may prove helpful in select situations such as the distinction of (a) benign nerve sheath tumors from other benign mesenchymal tumors such as fibrous histiocytomas, (b) cellular neurilemomas from malignant schwannomas, (c) malignant schwannomas from conventional fibrosarcoma (d) malignant melanomas from many carcinomas, and, possibly (e) juvenile xanthogranulomas from histiocytosis X.