Cutaneous branches of radial nerves in patients with lepromatous leprosy (LL) and borderline lepromatous (BL) were studied by light and electron microscopy. Foamy macrophages were found more or less in the nerve fibers of all leprosy patients and distributed in the epineurial, perineurial and endoneurial areas. In the endoneurium, the foamy macrophages were mainly located in the subperineurial and perivascular spaces. Vacuolated Schwann cells were also found in the nerve fasciculus. In electron microscopy, these foamy macrophages and vacuolated Schwann cells contained numerous small dense materials, irregular in size and shape, considered to be degenerated and fragmented mycobacterium leprae. These dense materials were found also in the cytoplasm of vascular endothelial cells. These findings suggest that mycobacteria enter into the endoneurium via the blood vessels. In our present study, on the other hand, it was very difficult to find the intact mycobacteria in the cytoplasm of the foamy macrophages, Schwann cells or endothelial cells, as well as in the Ziehl-Neelsen staining of paraffin sections. The disappearance of intact bacilli in our present study might have been caused by multi drug therapy. The myelinated nerve fibers were degenerated and disappeared in variable degrees. Degenerative changes of the myelin sheath developed from the outer layer to the inner layer with disarrangement of the lamellar structure. These findings were different from myelin destruction of peripheral nerves in Wallerian degeneration. The degenerative changes of the myelin sheath are caused by degeneration and destruction of Schwann cells in leprosy patients. Fibrosis surrounding myelinated and unmyelinated nerve fibers, i.e., periaxonal fibrosis, was found to a greater or lesser extent in the endoneurium. In the present study, it is still unclear whether the periaxonal fibrosis was due to necrosis of the Schwann cells by infection of mycobacteria or to an autoimmune mechanism such as antiperipheral nerve antibody. However, lamellated concentric fibrosis surrounding regenerative myelinated and unmyelinated nerve fibers with the disappearance of mycobacteria suggests that degenerations and regenerations of nerve axons were repeated during clinical cause. These findings indicated that autoimmune mechanisms play an important role in the pathogenesis of periaxonal fibrosis.