The role of regenerating axons in the restructuring of the endoneurium into minifascicles after peripheral nerve injury was investigated. Endoneurial changes were studied in the control distal stumps of crushed rat sciatic nerves and in the distal nerve stumps in which, in addition to other cellular elements, the original perineurium had also been destroyed by freezing and thawing. Injured nerves in which axonal regeneration had been prevented were examined for comparison. The changes were observed at light microscopic and ultrastructural levels. Two weeks after nerve injury, incipient endoneurial restructuring by proliferating endoneurial fibroblast-like cells was observed in the distal nerve stumps in all groups of animals. By 4 weeks, the endoneurial changes in control regenerating nerves (crush only) displayed no progress. On the contrary, extensive minifascicular reorganization of the endoneurium was observed in the distal nerve stumps in which the original perineurial barrier had been eliminated. The cells that encircled the minifascicles in the nerves with regenerating axons looked like differentiated perineurial cells, whereas in the absence of regenerating axons, the endoneurial cells that encircled the neurilemmal tubes mostly lacked typical features of the perineurial cells. Therefore, persistent perineurial damage is necessary to induce complete endoneurial compartmentalization. In this case, the regenerating axons enhance differentiation of the endoneurial fibroblast-like cells into the perineurial cells.