Carcinoma of the pancreatobiliary system often produces perineural invasion extending to extrabiliary and extrapancreatic sites. A surgical technique has been developed to manage this invasion and has been used since 1974. Serial sections were prepared from 90 resected specimens and examined for perineural involvement of intramural and extramural biliary plexuses as well as the pancreatic nerve plexus. Perineural invasion was seen in 34 of 40 patients with carcinoma of the common bile duct, in ten of 14 with cancer of the gallbladder and in four of 15 with carcinoma of the papilla of Vater. Invasion extended to the extramural biliary or pancreatic nerve plexuses in 24 of 40 patients with carcinoma of the bile duct. Involvement of the intrapancreatic nerves was seen in all 21 patients with carcinoma of the pancreatic head and that of the pancreatic nerve plexus in 17 of 21. Perineural invasion was often found at the most progressive margin of the tumour. The survival rate of patients with perineural invasion was low compared with that of those without such invasion, although survival of patients with perineural invasion tended to be longer after extensive resection. The perineural space should be regarded as an important route for the spread of pancreatic and biliary carcinoma.