When the giant axons of the cockroach Periplaneta americana are transected the proximal segment (the part connected to the soma) regenerates by tip sprouting and the distal segment degenerates. The initial ultrastructural response (24-48 h post-transection) occurring in the cut ends of the proximal and distal segments are similar. This response includes the disappearance of neurotubules; appearance of amorphous material in the axoplasm and a gradual accumulation of large numbers of small mitochondria, vesicles of various sizes and smooth endoplasmic reticulum. The axolemma in the region of organelle accumulation invaginates and glial processes are present in the invagination. The similarity of the changes that occur in the cut ends of the proximal and distal segments indicates that the primary reaction to axotomy is of a local nature and does not depend on the soma. Two to four days after transection, the cut end of the distal axonal segment reveals signs of degeneration. These include the appearance of swollen mitochondria, lysosomes, myelinated bodies and shrinking of the axon. In addition there is a massive proliferation of glial processes around the degenerating axons. Sprouting from the tip of the proximal segment starts 5--7 days post axotomy. Sprouts were identified as profiles containing few neurotubules, many vesicles and abundant smooth endoplasmic reticulum. 'Growth cone-like' structures were identified. The ultrastructural reorganization of the cut end of the proximal segment is discussed in relation to changes in membrane properties of the regenerating tip, as previously described by us.