Taxol, a compound that enhances microtubule polymerization, was injected locally into the sciatic nerve of the rat and its effects examined by electron microscopy up to 21 days postinjection. The drug did not have a degenerative effect upon the P.N.S. but caused a slow accumulation of microtubules, first seen within Schwann cells and shortly thereafter, in axons. Within Schwann cells, microtubule aggregates evolved at the expense of rough endoplasmic reticulum (ER) and microtubule arrays were frequently encountered in relationship to smooth ER cisterns. Arrested mitoses were seen, there was no proliferation of Schwann cells and long stretches of axon were naked. Within axons, microtubules predominated over intermediate filaments and displayed a tendency to cluster around mitochondria. The lesion appeared to be focal and to be related to a local axonal stasis. These experiments provide yet another tool for the examination of Schwann cell-axon interactions.