In order to determine whether bladder dysfunction and hydronephrosis in diabetic Chinese hamsters are associated with nerve pathology, the pelvic visceral nerves of diabetic and normal hamsters were examined with histochemical and electron microscopic techniques. Acetylcholinesterase activity was reduced in the nerves and on smooth muscle fibers in the urinary bladder of diabetic hamsters when compared to controls. Depression of enzyme staining was most marked in those hamsters with the most severe hydronephrosis. Frequent examples of aberrant myelination were found in the pelvic plexus and urinary bladder of diabetics. Many of these myelinated fibers exhibited wide periaxonal spaces lined by unusual processes of Schwann cells. An increase in the number of microtubules in axons and circular profiles of Schwann cells, which failed to enclose axons, gave evidence of axonal degeneration or Schwann cell injury in diabetic nerves. These findings suggest that pathologic changes in pelvic visceral nerves may underlie urinary bladder dysfunction in the diabetic Chinese hamster.