Sural nerve biopsies of four patients, aged 54--76 years, with a predominantly sensory type of neuropathy following high dosages of thalidomide were examined by light and electron microscopy. The present study includes a qualitative and quantitative evaluation of unmyelinated nerve fibers. Despite severe neuropathy, increased numbers of small unmyelinated axons per endoneurial area were noted in all patients. This numerical increase appeared to be independent of aging, since it was not seen in two senile controls, studied at the age of 83 and 88 years. The increase in the endoneurial density of unmyelinated axons, especially of small sized fibers, is likely to be related to regeneration following degeneration of unmyelinated axons although endoneurial shrinkage secondary to loss of large myelinated fibers could have caused an additional increase in the number of axons per endoneurial area. Axonal sprouting, despite degeneration of large numbers of myelinated and unmyelinated fibers, appears to be consistent with some of the characteristic clinical features of thalidomide neuropathy such as paresthesias, hyperesthesia for pain and temperature, and disturbances of autonomic functions. On the other hand, a variable number of empty Schwann cells (bands of Büngner) and pockets at the surface of many Schwann cells noted in the four patients with neuropathy were also seen in both senile controls with no signs of neuropathy. Thus, it is obvious that pockets and empty Schwann cells may be related to aging or other causes of slow axonal wasting with Schwann cell proliferation and are not necessarily associated with clinically manifest neuropathy.